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UNIVERSITY  OF  CALIFORNIA 

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A  Veteran  i?|)ecie  Clerk. 


THE    BANKS    OF    NEW-YORK, 

THEIR    DEALERS, 
THE     CLEARING     HOUSE, 

AND 

THE    PANIC    OF    1857. 

WITH        A        FINANCIAL       CHART. 

BY     J.    S.    GIBBONS. 

THIRTY     ILLUSTRATIONS,     BY     HERRICK. 


NEW    YORK: 
PUBLISHED    BY    D.    APPLETON    &     CO 

1858. 


Entbeed,  according  to  Act  of  Congress,  In  the  year  One  Thousand  Eight  Hundred 
and  Fifty-eight,  by  J.  S.  GIBBONS,  in  the  Clerk's  Office  of  the  District  Court 
of  the  United  States  for  the  Southern  District  of  New  York. 


-9 


M  GEORGE     H.    ELLERY, 

u. 

OF   NEW  TOEK, 
THK  AUTHOR   DEDICATES  THIS  VOUJME,  AS  A  MAEK   OP  ESTEEM   FOE   HIS  PEE80NAL 
•m  CHAEAOTEE,  his    trPEIGHTNESS    AS    A    MEEOHANT,  AND 

•J  HIS  CONSTANCY  AS  A  FBIEND. 


28(>a09 


PREFACE. 


It  is  not  possible  to  introduce  into  a  single  volume 
all  that  is  cui'ious  or  interesting  about  banks ;  and 
scarcely  less  difficult  to  avoid  some  things  that  may 
appear  trifling  or  impertinent. 

The  author  has  endeavored  to  give  a  picture  of  the 
banks  of  New  York  as  they  are ;  to  descri,be  the  duties 
of  the  officers  and  clerks,  and  their  daily  experience 
in  transacting  business  with  the  dealers ;  also  to 
describe  the  conduct  of  dealers  in  their  intercourse 
with  banks.  Some  of  the  scenes  presented  may  seem 
extravagant,  and  perhaps  would  be  accepted  as  cari- 
cature, if  not  vouched  for  as  literally  true.  The  errors 
of  the  book  are  not,  at  least,  in  that  direction.  The 
real  exaggerations  of  fact  and  manner,  if  rendered 
with  the  exactness  of  a  daguerreotype,  could  hardly 
fail  to  excite  a  suspicion  of  designed  caricature. 

A  considerable  part  of  the  author's  purpose  has 
been  to  give  a  general  knowledge  of  the  method  of 
bank  book-keeping.  It  would  be  impossible  to  do 
this  thoroughly,  without  running  into  the  dullest  of 
details.  Any  person  of  intelligence  and  vivacity  will 
supply  the  omissions  or  oversights  under  this  head. 

If  the  volume  fails  to  show  that  there  is  nothing  in 

1 


VI  PREFACE. 

the  business  of  banking  to  entitle  it  to  more  respect 
than  any  honest  mercantile  employment,  and  that 
therefore,  the  banker  and  the  dealer  meet  on  equal 
terms,  it  is  deficient  in  a  very  important  respect.  A 
dealer  commits  no  greater  mistake,  than  to  begin 
treating  with  a  bank  as  if  it  were  a  superior  power ; 
and  its  officers  do  not  need  such  a  stimulus  to  their 
self-conceit. 

The  description  of  the  Clearing  House,  and  the 
sketch  of  the  panic,  have  made  the  volume  one  third 
larger  than  was  originally  intended. 

With  respect  to  the  panic,  the  author  owes  every 
thing  to  the  invaluable  records  of  the  Clearing  House, 
an  institution  which  has  brought  about  a  new  era  in 
our  city  banking,  and  the  full  usefulness  of  which  is 
hardly  yet  imagined  even  by  a  majority  of  those  who 
share  in  its  direction.  In  a  few  months,  it  has  done 
more  real  service  to  the  interests  of  trade  in  New 
York,  than  the  Chamber  of  Commerce  in  the  century 
of  its  existence ;  though  that  has  done  as  much  as 
it  could,  without  the  organization  of  an  efiective 
financial  bureau,  such  as  the  Clearing  House  must 
become,  as  an  auxiliary  to  its  labors. 


CONTENTS. 


CHAPTER  I. 


Inteodtictiox — Number  of  Banks,  and  their  Managers  and  Clerks — "What  Banks 
Represent— What  a  Bank  is— The  New  York  System— How  a  Bank  is  organ- 
ized, and  by  whom  managed — Technical  and  Slang  Terms. 

CHAPTER  II. 

Thb  Pbesident — His  Legal  Relations  to  the  Bank — Should  be  a  Man  of  Educa- 
tion and  superior  Character — The  Board  of  Directors  Transacting  Business — 
Offerings  for  Discount — Rambling  Conversations — The  Artistic  Diversions  of 
Mr.  Marks — Discounting  Paper,  and  Discussions  of  Character — Narrow-minded 
Directors — Operations  in  Sugar — Directors  Crotchett  and  Buttonwood — Adjourn- 
ment—Director Miller  pays  a  Note  of  $10,000— Two  Characters  of  a  President 
in  contrast — Personal  Habits  of  Dealers  enquired  into— Commercial  Agency 
Reports — Great  Influence  of  the  President — Examining  Collateral  Notes — Jonas 
Marks  (confidential) — Claims  of  Directors  conflicting  with  the  Rights  of  Dealers — 
A  Particular  Friend  in  Trouble. 

CHAPTER  III. 

TnK  CASinEE — His  Special  Duties — Power  of  Appointing  and  Removing  Him — 
Not  Subordinate  in  Everything — The  Correspondence — A  Tight  Market — Receiv- 
ing New  Accounts  —  Personal  Solicitation — Mr.  A.  "  Wotft  submit  to  such 
Treatment" — In  Debt  to  the  Clearing  House — Kiting — The  Cashier  in  a  state 
of  Siege — Mr.  Sweatem's  Expostulation — Mr.  Boyle  In  a  Rage — A  Great  House 
Saved — Complaints  of  Dealers — The  Right  Character  for  a  Cashier — Two  Hun- 
dred Thousand  Dollars  Stolen. 

CHAPTER  IV. 

The  Patinq  Tellee— His  Duty,  Bonds,  and  Salary— Custody  of  the  Vault,  and 
Keeping  of  the  Key — Desk  Arrangements — Sends  Exchanges  to  Clearing  Houso 
— Certifying  and  Paying  Checks  —  Certification  Check-list  —  Peculiarities  of 
Checks — Careless  Habits  of  Merchants — Ingenious  Forgery  Detected — Losses 
never  Discovered — A  Successful  Forgery  of  $10,000 — Classification  of  Accounts 
— Impositions  on  the  Teller — Samuel  Filibuster  Overdraws  his  Account — Identi- 
fying Indorsers — Certifying  Checks  in  Advance  of  the  Deposit — Various  Incl- 

vii 


Vlll  CONTENTS. 

deutA — Ignorance  of  Bank  Usage  —  IIow  Alexander  Jones  may  cheat — The 
Failure  of  Skarom  &  Co.— The  Teller's  Proof— Cheating  by  Certification- A 
Narrow  Escape. 

CHAPTER  V. 

Tni  Deposit  Tki-lek  —  His  peculiar  Duties,  and  the  Forms  of  his  Account- 
Books —  Forms  of  Exchange  and  Proof-list  —  Of  what  Deposits  consist — Abel 
Dodge  deposits  kiting  Checks,  and  then  fails — The  Teller  has  great  Influence 
In  determining  the  Character  of  the  Business — Detection  of  Spurious  Bills — 
Eapid  Counting  —  Claims  for  Differences — Disputes — Improved  Discipline — A 
Thousand  Dollars  Short  —  The  Teller  appealed  to  by  the  Cashier  —  Causes 
Accounts  to  be  closed — How  he  corrects  the  Errors  of  Dealers — A  Poor  Shoe- 
maker waiting  for  a  Deposit. 

CHAPTER  VI. 

TiTE  Note  Teller — Classes  of  Notes — Form  of  Collection  Note-Book — Adding 
Cash  Checks  from  Morning  Letters— Paying  Notes,  and  saving  Tickets — Errors 
of  Note-makers — The  Wrong  Person  served — Various  Incidents. 

CHAPTER  VII. 

The  Discoitnt  Clkek — The  Difference  between  Interest  and  Discount — Offering 
of  Notes  for  Discount — Examples — Transcription  of  Records— 7Discount  Ledgers 
— Proof  of  Accounts  —  Dealers  calling,  after  a  Board  Session,  to  know  what 
luck — The  manner  in  which  they  are  affected  by  Disappointment — Terribly 
Tight  Times— Mr.  Axletree— A  Fraud. 

CHAPTER  VIII. 

The  Note  Department — Notes  the  great  Instruments  of  Commerce — The  Col- 
lection Register— Consequence  of  wrong  "  Timing"  of  Notes — Page  of  Register 
and  Tickler — Custody  of  Notes. 

CHAPTER  IX. 

TuE  Book-keepee — His  necessary  Qualifications  —  The  Alphabetical  Arrange- 
ment of  Accounts — Balancing  Accounts — Answering  the  Paying  Teller's  ques- 
tions from  memory  —  John  Brown  gets  a  Notice,  and  proves  that  Alexander 
Jones  ought  to  have  had  it — A  Fraud — Scale  of  Apportionment  for  a  Ledger. 

CHAPTER  X. 

TuE  General  Book-keeper — Description  of  his  Books — Form  of  a  Bank  State- 
ment, and  how  it  serves  as  a  Guide  in  the  Discounting  of  Paper.  The  Stock 
Ledger. 

CHAPTER  XL 
The  AflsiSTANT  Teller — Examination  of  the  Exchanges,  and  his  Help  to  the  other 
Tellers— Form  of  Proof  for  the  Separate  Counting  of  the  Exchanges. 


CONTENTS.  IX 

CHAPTER  XII. 
The  Check  Clebk — His  Qualifications  and  Duty — His  Chances  of  Promotion. 

CHAPTER  XIII. 

The  Kunnee — Prepares  the  Bank  Notices  for  Distribution  —  Collects  Sight 
Drafts,  &c. — Serving  Notices — Difficulty  of  always  finding  the  right  Man — Col- 
lects Information,  and  imparts  it  to  the  Officers — Serves  as  Talesman  on  a  Jury. 

CHAPTER  XIV. 

The  PonTER — The  Keys  of  the  Bank  Building  in  his  Custody— General  Duties — 
Counting  Coin — His  Skill  in  Detecting  Counterfeits — The  Old-fashioned  Pouch 
— The  Cashier  in  a  pet,  because  Donaldson  won't  stay  in  two  places  at  the  same 
time — Messenger  to  other  Banks — Is  the  Bank's  Letter  Carrier — Reports  Delhi 
not  taken — Assists  the  Paying  Teller — Tries  the  Door,  to  be  sure  that  it  is  locked 
— Appointed  to  the  Dignity  of  Specie  Clerk — Long  and  honorable  Career  of  the 
Bank  Porter — A  Veteran  in  the  Service — The  Gold  Spectacles. 

CHAPTER  XV. 

Pp.esents — No  Favor  in  Banking  between  the  OfScers  and  the  Dealers  ;  or  if  so^ 
from  the  latter  to  the  Bank — Presents  have  a  b.ad  Influence,  and  lay  the  basis 
for  Fraud — Anecdotes — Practice  of  Geoege  Curtis,  Esq.,  late  President  of  the 
Continental  Bank. 

CHAPTER  XVL 

Bank  Discipline — Source  of  the  fears  of  Bank  Officers  with  respect  to  Fraud — 
Plans  of  Gamblers — The  profitable  occupation  of  Leisure  Hours — A  System  of 
Daily  Reports. 

CHAPTER  XVIL 

How  TO  Transact  Business  with  a  Bank — Short  Rules  and  Recommenda- 
tions. 

CHAPTER  XVIIL 

The  Clearing  House.— The  Old  Plan  of  making  Exchanges— The  Porter's  Set- 
tlement— Irritations  and  Impositions — Origin  of  the  Clearing  House— Constitu- 
tion of  ditto — The  Rooms — The  Daily  Routine— Forms  of  the  several  Tickets 
used  —  An  amazing  Amount  of  TVork  done  in  Six  Minutes  —  The  Time  saved 
—Extraordinary  Skill  of  the  Settling  Clerks— Clearing  House  Proof— Method 
of  Discovering  Errors — Scale  of  Fines — Specie  Certificates  and  Easy  Settle- 
ments— Reclamation  for  Difierences,  how  Settled — Summary  of  Work  Saved 
over  the  Old  Method — The  Records— Their  Great  Value  and  Use — A  Clear 
Principle  in  Banking  demonstrated— Limiting  Influences— The  Weekly  State- 
ments— The  Quarterly  Statements  good  for  nothing  before  the  Clearing  Hou.so 
■was  org.inized — Improvement  in  the  whole  System  of  Banking  brought  about 
by  the  Clearing  House — The  Result  of  Five  Years  of  Tri.il— The  Expenses  of 
the  House— The  Admirable  System  and  Order  of  its  Accounts— Tables,  illus- 
trated by  a  Financial  Chart,  for  the  Guidance  of  the  Bank  Board — The  first 
Proposal  for  a  Clearing  House. 


CONTENTS. 


CHAPTEE  XIX. 

The  Panic— a  General  Sketch— Gradual  Reduction  of  Loans  for  Four  Years — 
The  Failure  of  the  Ohio  Life  Insurance  and  Trust  Company,  and  its  Effect  on 
the  Weekly  Statements — A  great  Change  wrought  in  one  Day — The  Reduction 
of  Loans  not  caused  by  the  withdrawal  of  Deposits — The  Fluctuating  Part  of 
the  basis  of  Bank  Loans  considered — The  Steadiness  of  the  Bank  Deposit — 
Contrast  in  the  Fall  of  Securities  in  two  periods — The  Final  Blow — Cause  of  the 
Panic — The  Influence  of  the  Specie  Settlements  of  the  Clearing  House — An 
Alleviation — The  Chart — Separate  Expansion  cured,  but  Harmonious  Expan- 
sion allowed — Measurement  of  Expansion  by  Specie  Reserve — Proportion  of 
Specie  recommended — An  Exception — The  Difficulties  of  Bank  Government — 
Incompetent  and  Tiishonest  Officers  —  The  IndependenVs  List  of  Failures — 
What  the  Panic  Developed — Personal  Credit  the  Cause  of  Fluctuation — Bank 
Currency — No  Connection  between  Loans  and  Circulation — Bank  Note  Re- 
demption—  Objections  and  Errors  —  Trade  in  Bills — Will  Suspension  occur 
again?  —  A  Financial  College  —  Anomalies  in  the  Banking  System  —  The  Ox 
goring  the  Bull — Practical  Absurdities — Notions  about  Gold — Its  exact  office 
— Causes  of  its  accumulation  in  New  York. 


ILLUSTRATIONS. 


PAGE 

1,  The  Specie  Cleek  of  the  Union  Bank, — Frontispiece. 

2.  The  Board  of  Dikectoes  uiscountino  Notes, 31 

8.  The  artistic  Diversions  of  Mk.  Marks, 83 

4.  The  President  examining  Collateral  Notes, 61 

5.  Just  Elected, 70 

6.  Me.  a.  won't  submit  to  such  Treatment, 82 

7.  The  Cashier  caught  by  the  Button-hole, 84 

8.  Mr.  Eight  up, 86 

9.  Me.  KiGHT  down, &S 

10.  The  Cashier  in  a  State  op  Siege, 90 

11.  Me.  Sweatem's  final  Argument 91 

12.  A  BAD  Bank  Statement, 93 

13.  The  Paying  Teller  and  his  Customers, 144 

14.  A  tight  Day  at  the  Discount  Desk, 199 

15.  Consolation— Better  fare  than  at  the  Discount  Board,  .       .  209 

16.  Outside — Two  per  Cent  a  Month, 210 

17.  Inside — The  Consequences  of  Two  per  Cent  k  Month,       .       .  212 
IS.  The  Eunnee  on  a  fruitless  Search, 249 

19.  Matthias,  Porter  of  the  Bank  of  the  State  of  New  Toek,    .  264 

20.  Father  Cole, 269 

21.  An  old-fashioned  Friday's  Settlement, 294 

22.  Plan  of  the  Clearing  House  Rooms, 303 

23.  The  Clearing  House  Manager  in  his  Pulpit,        ....  806 

24.  Making  the  Daily  Exchange, 307 

25.  A  Ton  of  Gold, 315 

26.  The  Specie  Clerk  with  Half  a  Million  in  his  Pocket,         .       .816 

27.  Financial  Chart, g3g 

23.  Wall  Street  on  the  Day  op  Specie  Suspension,        .       .       .       .346 
29.  A  "Bun"  on  a  Bank, 361 

80.  The  Financial  Chart  reduced, 867 

81.  Diagram  of  Currency  and  Loans, 380 

82.  The  Bank  Circulation, 884 

zi 


pW"  A  number  of  the  Illustrations  in  this  Volume  were  executed,  under 
the  instructions  of  Mr.  Heekick,  at  the  New  York  School  of  Design  for 
Women. 


THE  NEW  YORK  BANKS. 


CHAPTER   1. 

INTKODUCTION. 

Theee  are  fifty-three  banks  in  the  City  of  New 
York,  with  an  aggregate  capital  of  about  sixty-six 
millions  of  dollars.  The  number  of  persons  imme- 
diately connected  with  them,  as  directors,  officers,  and 
clerks,  is  nearly  two  thousand.  The  number  of  those 
who  transact  business  with  them  as  stockholders,  de- 
positors, borrowers,  or  in  some  other  capacity,  is 
several  hundred  thousand.  In  addition,  a  still  larger 
number  reap  from  them  a  sensible  convenience  in  less 
direct  methods ;  and  as  to  the  influence  M'liich  they 
exert  over  the  affairs  of  the  community  generally, 
there  is  no  way  of  forming  even  a  proximate  estimate 
of  it.  Not  an  individual  inhabitant  of  New  York  can 
say  that  he  is  not,  at  every  moment,  either  the  better 
or  the  worse  for  the  existence  of  banks ;  or  both  better 
and  worse.  There  are  some,  probably,  who  never  touch 
a  bank-note,  who  never  cross  the  threshhold  of  a  bank, 
who  use  gold  and  silver  only  in  their  business,  and 
who  think  that  they  are  therefore  free  from  all  the 
1*  9 


10  mTRODUCTION, 

influences  of  banks  ;  but  this  is  a  mere  fancy.  Tliey 
can  no  more  escape  from  them,  than  they  can  from 
the  influence  of  our  common  schools,  or  than  they  can 
avoid  breathing  the  common  air.  If  they  are  day- 
laborers,  and  get  their  wages  in  silver,  those  wages 
are  greater  or  less,  because  of  the  existence  of  banks ; 
and  so  with  the  price  of  every  thing  they  eat  or  wear. 
Banks  represent  the  capital,  labor,  and  commerce 
of  the  country.  The  fact  that  they  exert  such  influ- 
ence over  the  people,  and  that  there  is  no  escaping 
from  it,  is  of  itself  enough  to  set  jealousy  to  work,  and 
to  create  parties  in  opposition  to  them.  Even  if  they 
had  always  been  sources  of  unmixed  public  benefit, 
there  could  be  no  guarantee  for  the  future.  But 
they  have  rarely  been  conducted  without  sufficient 
abuse  of  powers,  to  keep  alive  perpetual  hostility 
towards  them,  on  one  ground  or  another.  The  right 
to  issue  "  paper  money"  (to  the  public  their  most  in- 
teresting function)  has  not  always  been  so  guarded 
as  to  prevent  fraud,  which  has  fallen  chiefly  on  the 
poor  and  working  classes,  and  has  therefore  readily 
been  made  the  foundation  of  popular  excitement ;  and 
this  kind  of  fraud,  more  than  any  other,  has  escaped 
the  just  penalties  of  the  law.  Politicians  have  eagerly 
seized  on  these  facts  to  win  the  support  of  "  the  out- 
raged million."  It  has  not  suited  them  to  sj)eak  of 
the  advantages  which  have  resulted  from  the  organiz- 
ation of  capital ;  but  they  have  kept  before  the  eyes 
of  the  multitude  an  exaggerated  picture  of  the  evils 
which  flow  from  the  existence  of  banks,  even  charg- 
ing upon  them  the  consequences  of  individual  extra- 
vagance and  dishonesty.     It  is  surprising  to  what  an 


WHAT   A   BANK   IS.  11 

extent  they  have  succeeded  in  imposing  these  errors 
and  falsehoods  on  the  public  mind.  Kot  only  the 
ignorant,  but  many  who  are  well  informed  on  general 
subjects,  have  been  made  to  accept  the  teachings  of 
the  demagogue,  that  banks  are,  in  their  very  nature, 
opposed  to  honest  industry,  and  oppressive  to  the  poor ; 
that  they  favor  a  monopoly  of  rights  and  privileges 
by  the  few  ;  that  they  promote  the  extremes  of  wealth 
and  poverty  in  a  country ;  and  finally,  that  they  are 
dangerous  to  popular  freedom.  For  the  last  thirty 
years,  opposition  to  banks  has  been  a  lever  in  the 
hands  of  politicians,  with  ignorance  as  its  chief  ful- 
crum, to  keep  parties  in  ofiice.  The  growing  intelli- 
gence of  the  people  has  gradually  corrected  this  state 
of  things ;  while  better  laws  and  methods  of  business 
have  removed  much  of  the  old  ground  of  opposition 
to  banks. 

The  purpose  of  this  volume  is,  to  present  a  literal 
history  of  the  ISTew  York  City  banks  in  their  present 
organization  and  action  ;  to  show  how  they  are  con- 
nected with  the  interest  and  the  convenience  of  all 
classes  of  people ;  to  explain  the  manner  in  which 
they  transact  business ;  and  to  place  them  in  their 
true  position  as  correlative  with  commerce,  and  not 
above  it.  This  will  include  a  description  of  the  duties 
of  the  officers  and  clerks,  and  the  daily  incidents  of 
the  business,  with  the  frauds  and  abuses  to  which  it 
is  liable ;  and  also  of  the  Clearing  House,  which  in- 
troduced a  new  era  in  American  Banking. 

Some  data,  bearing  on  the  causes  of  the  panic  of 
1857,  have  enlarged  the  volume  beyond  its  original 
design. 


12  INTRODUCTION. 

A  bank  is  simply  a  plan  of  organizing  capital,  by 
which  the  full  benefits  of  it  are  secured.  The  separate 
means  of  individuals  are  united  together,  and  a  large 
sura  thus  constituted,  which  is  hired  out  on  interest 
to  those  who  need  it.  This  combination,  and  the 
manner  of  its  use,  may  be  compared  to  a  dam  across 
a  valley,  and  the  accumulation  in  one  body  of  the 
water  of  the  separate  springs,  which  otherwise  would 
be  of  little  service ;  but  being  united,  they  form  a 
propelling  power  for  extensive  machinery. 

Without  the  organization  of  capital  in  some  form, 
a  community  must  remain  in  comparative  barbarism. 
The  few  who  possess  wealth  above  their  wants  must 
either  send  it  away  for  investment  where  it  would 
enrich  other  places,  or  it  would  for  the  most  part  lie 
dead,  while  the  poor  would  continue  in  ignorance  and 
drudgery.  A  public  school,  a  library,  or  a  church, 
would  be  imjDOSsible  without  combination.  It  is 
therefore  a  social  necessity  to  organize  capital,  and 
communities  thrive  in  proportion  as  this  organization 
is  effected.  They  prosper,  not  only  in  material  sub- 
stance, but  in  education  and  morals. 

Any  one  who  has  travelled  among  our  country  vil- 
lages, out  of  the  immediate  influence  of  cities,  has 
occasionally  been  struck  by  the  neglect  of  natural 
advantages,  the  lack  of  energy,  the  rudeness  of  life 
and  character,  and  the  almost  savage  features  of  the 
common  people.  But  on  visiting  the  same  place  after 
an  interval  of  a  few  years,  he  has  seen  a  total  change : 
a  larger  population,  a  better  class  of  buildings,  an 
air  of  thrifty  growth,  and  a  manifest  increase  of  com- 
fort.   The  old  lethargy  has  disappeared  ;  a  new  life 


THE   NEW   TOKK   SYSTEM.  13 

has  been  infused  into  everything;  even  the  counte- 
nances of  the  people  are  softened ;  a  less  brutal  and 
more  intelligent  spirit  beams  from  their  eyes.  A 
hanh  has  been  the  starting  point  of  this  new  career ; 
the  mill-dam  has  been  built  across  the  little  streams 
of  capital,  and  the  social  machinery  is  brought  into 
play. 

After  it  is  organized,  a  bank  gathers  other  capital 
by  saving.  It  presents  the  first  practical  idea  of 
economy  and  increase  to  thousands  of  people.  It 
brings  out  the  old  stockings,  and  pours  their  contents 
into  the  common  dam,  which  rises  higher  and  drives 
more  wheels. 

The  objection  to  banks,  that  they  foster  credit,  is  a 
complete  solecism.  Credit  is  at  the  same  time  the 
co-efficient  and  the  supplement  of  capital.  The  busi- 
ness of  banks  is,  to  prevent  abuse  while  Tnaking  the 
Tnost  of  it.  And  so  well  have  they  succeeded  in  this, 
that  they  have  mostly  retained  popular  favor  and 
confidence,  in  spite  of  their  own  errors,  and  of  the 
denunciations  of  their  enemies. 

The  present  system  of  banking  in  the  State  of  Kew 
York,  is  the  result  of  much  experience,  and  of  many 
failures  in  financial  legislation.  The  plan  of  creating 
banks  by  special  charter  was  abolished  in  1838,  by  the 
enactment  of  a  general  law,  under  which  any  person, 
or  a  number  of  persons,  with  tlie  required  capital, 
may  organize  a  bank.  The  law  has  since  undergone 
many  alterations,  and  it  continues  to  be  "  amended" 
at  every  session  of  the  Legislature.  Kew  restrictions 
are  constantly  suggested  by  newspaper  editors,  or  by 
politicians  who  cannot  in  any  other  way  so  easily 


14  INTRODUCTION. 

make  themselves  talked  about  as  by  threatening  to 
disturb  the  organized  capital  of  the  State.  The  own- 
ers of  one  hundred  and  eight  millions  of  bank  stock 
have  cause  for  alarm,  when  Mr.  Smashemup  brings 
in  a  bill  for  their  "  better  protection."  He  is  waited 
upon  by  committees  from  New  York,  receives  letters 
from  distinguished  bankers,  and  for  a  time  is  the 
focus  of  an  immense  circle.  iSTo  name  is  so  much  in 
other  people's  mouths,  as  Mr.  Smashemup's !  It  is 
Mr.  Smashemup's  bill  in  the  Assembly,  and  Mr. 
Smashemuj)'s  bill  in  the  Senate.  Then  come  the 
amendments  to  Smashemup's  bill  in  both  Houses, 
and  Mr.  Smashemup  is  called  on  to  explain,  which 
he  does,  by  a  great  speech  on  banks,  economy,  cor- 
ruption, and  the  public  debt.  Mr.  Smashemup's  name 
is  in  all  the  newspapers,  and  even  if  his  bill  with  all 
the  amendments  is  indefinitely  postponed,  he  returns 
to  his  constituents  in  "  a  blaze  of  glory,"  with  good 
chances  of  nomination  to  Congress. 

The  general  banking  law  of  the  State  of  New 
York,  with  its  amendments,  and  all  statutes  relating 
to  it,  consist  of  more  than  three  hundred  octavo 
pages.  The  system  is  hampered  with  superfluous 
provisions,  but  with  the  voluntary  guards  thrown 
around  it,  and  especially  that  of  the  Clearing  House 
in  the  City  of  New  York,  it  is  probably  the  best  now 
existing  in  any  part  of  the  world.  The  principal  fea- 
tures of  it  are  as  follows : 

1.  The  deposit  in  the  Bank  Department  at  Albany 
of  ample  securities  for  the  redemption  of  all  bills 
issued  for  circulation.  The  original  law  admitted  as 
security,  stocks  of  the  United  States,  and  stocks  of 


THE   NEW   YORK   SYSTEM.  15 

the  several  States  wliich  should  be  satisfactory  to  the 
Comptroller,*  to  the  amount  of  one  half  at  least  of  the 
bills  called  for  by  any  person  or  association,  the  same 
to  be  equal  to  a  stock  producing  five  per  cent  per 
annum.  The  security  for  the  other  half  of  the  bills 
might  consist  of  bonds  and  mortgages  on  unincum- 
bered, improved,  and  productive  real  estate,  within 
the  State  of  New  York,  worth  by  appraisement  double 
the  amount  of  their  face,  independently  of  any  build- 
ings thereon.  This  latitude  of  security  proved  unsafe. 
The  stocks  of  several  of  the  Western  States  especially, 
fell  much  below  par,  and  the  real  estate  in  many  cases 
was  accepted  at  a  fictitious  valuation.  The  conse- 
quence was,  the  bills  of  banks  which  were  forced  into 
liquidation,  were  not  redeemed  in  full.  The  amend- 
ments of  the  law,  suggested  by  its  longer  operation, 
have  corrected  this  ground  of  insecurity,  and  the 
bank-bills  of  the  State  of  New  York  may  now  be  con- 
sidered "as  good  as  gold,"  with  the  advantage  of 
more  convenience  for  many  of  the  practical  uses  of 
trade.  The  basis  of  their  issue  is  restricted  to  stocks 
of  the  State  of  New  York,  and  of  the  United  States, 
with  a  proportion  of  mortgages  on  real  estate,  not 
exceeding  two-fifths  of  its  appraised  value.  The  kind 
of  security  is  always  expressed  on  the  face  of  the  bill. 
Those  which  are  based  on  real  estate,  are  therefore 
distinguishable  by  the  public,  and  are  treated  with 
little  favor.  The  Bank  Superintendent  has  recom- 
mended to  the  Legislature  to  admit  only  stock-securi- 
ties hereafter. 

*  Now  called  "the  Bank  Superintendent." 


16  mTKODUCTION. 

The  plates,  from  which  the  bills  are  printed,  are 
not  allowed  at  any  time  to  be  in  the  keeping  of  the 
bank.  On  satisfactory  securities  being  deposited  in 
the  Banking  Department  at  Albany,  the  Superinten- 
dent issues  an  order  to  the  engraver  to  prepare  a  plate 
under  the  direction  of  the  bank  requiring  it,  and  to 
print  therefrom  as  many  bills  as  are  covered  by 
them.  The  bills  are  sent  to  the  Department  to  be 
numbered,  registered,  and  countersigned,  and  they 
are  then  forwarded  to  the  bank.  The  plate  is  deposited 
with  an  agent  of  the  Superintendent  in  the  same  city 
with  the  engraver,  from  whom  the  latter  obtains  it 
by  order,  for  any  future  printing.  The  following 
print  shows  the  state  of  the  bill  when  it  reaches  the 
bank. 


^                                                          No.  350. 

f  Irt  ImK  0f  tire  Sepblic 

e cured  by 
blic  stoclis 
tied  and  re 

banking  dc 

A.  Pkut 

Will  pay  ONE  hundred  dollars  on  demand 
to  the  bearer. 

New  York,  Jan.  4,  1856. 

"^a-l^'l 

Cashier.                                  PreHdent. 

TVhen  the  blanks  are  filled  by  the  signatures  of  the 
President  and  Cashier,  the  bills  are  ready  to  be  paid 
out  as  money. 

The  over-issue  of  bills  by  the  Superintendent,  or  the 
surrender  of  securities  before  the  circulation  based  on 
them  is  returned  to  the  department,  is  punishable 
with  a  fine  of  five  thousand  dollars,  or  with  five  years 
imprisonment,  or  both. 


THE   NEW   YORK   SYSTEM.  17 

2.  The  law  requires  a  quarterly  statement  of  the 
condition  of  each  bank,  under  the  oath  of  the  officers, 
and  the  publication  thereof  in  one  of  the  newspapers 
of  the  same  locality  as  the  bank.  Tlie  original  sworn 
statement  is  placed  on  file  in  the  Department ;  and  a 
summary  of  the  quarterly  statements  of  all  the  banks 
in  the  State  is  published  by  the  Superintendent,  who 
also  compiles  from  them  an  annual  report  to  the 
Legislature. 

The  banks  of  the  City  of  ITew  York  (which  have 
nearly  two-thirds  of  the  banking  capital  of  the  State) 
are  required  also  to  publish  in  one  of  the  daily  news- 
papers, on  every  Tuesday,  a  sworn  statement  of  their 
average  of  loans,  specie,  circulation,  and  deposits,  for 
the  week  ending  on  the  previous  Saturday. 

All  banks  under  the  general  law  are  required  to 
place  on  file,  twice  a  year,  in  the  office  of  the  clerk 
of  the  county  where  they  are  situated,  a  list  of  their 
stockholders,  as  they  stand  on  the  first  of  January, 
and  the  first  of  July,  and  to  send  a  duplicate  thereof 
to  the  Department. 

3.  Under  the  old  charters,  the  stockholder  was 
responsible  for  the  debts  of  the  bank,  only  to  the 
amount  of  his  corporate  interest.  He  might  lose  his 
stock,  or  such  proportion  of  it  as  would  suffice  to  pay 
the  debts,  but  no  more.  There  were  instances  of 
managers  using  bank  funds  for  speculations,  w^hich 
enriched  themselves  while  ruining  the  institution, 
and  then  retiring  to  live  in  luxury,  leaving  the  de- 
positors and  bill-holders  without  redress.  Under  the 
present  law,  the  circulation  is  provided  for  by  the 
securities  ;  and  to  pay  the  deuositors,  the  stockholder 


18  mTEODUCTION. 

is  legally  bound  for  the  par  amount  of  his  stock  over 
again,  if  tliat  should  be  necessary.  In  the  worst  cases 
of  bank  insolvency,  this  extent  of  loss  has  never  been 
incurred;  and  with  such  a  system  of  revision  and 
publicity  as  we  now  have,  the  condition  of  a  bank 
must  be  discovered  long  before  it  can  reach  that  ex- 
tremity of  misfortune. 

The  banks  in  the  City  of  Kew  York  are  further 
subject  to  the  regulations  of  the  Clearing  House,  of 
which  a  full  account  is  given  in  its  proper  place. 


The  plan  of  organizing  a  bank  under  the  general 
law  is  very  simple.  Articles  of  association  are  drawn 
up,  in  which  the  title,  capital  stock,  and  other  par- 
ticulars are  recited ;  the  names  of  the  first  directors 
are  generally  inserted,  the  act  of  subscription  cover- 
ing their  election.  The  subscriber  places  opposite  to 
his  name  the  number  of  shares  which  he  is  willing  to 
take,  and  pays  for  them  in  convenient  instalments,  as 
may  be  agreed  upon.  When  the  amount  of  capital 
is  fully  subscribed,  a  certificate  of  organization  must 
be  filed  in  the  office  of  the  Secretary  of  State,  and 
another  in  tlie  local  ofiice  of  County  Clerk.  Tlie  final 
act  of  organization  is  the  deposit  of  not  less  than  one 
hundred  thousand  dollars  of  securities  with  the  Super- 
intendent of  the  Banking  Department.  An  individual 
banker  is  allowed  to  begin  business  with  a  dejDosit  of 
fifty  thousand.  It  is  not  imperative  that  circulating 
bills  should  be  taken  out  for  this  deposit,  though  there 
is  but  one  case  among  the  city  banks  in  which  it  has 
not  been  done.     The  high  premium  on  stocks,  and  the 


EXCHANGES.  19 

labor  and  expense  of  maintaining  the  circulation,  are 
poorly  compensated  by  its  profits. 

A  bank  is  authorized  to  transact  business  immedi- 
ately after  depositing  its  securities  with  the  Superin- 
tendent. Until  its  own  bills  are  prepared  for  use,  it 
pays  out  those  of  other  city  banks,  retaining  them 
from  the  deposits  of  the  dealers.  It  is  usual  for  any 
city  bank  that  has  a  deficient  circulation,  to  adopt 
that  of  other  banks  as  far  as  may  serve  its  conveni- 
ence. 

The  business  of  the  first  day  brings  upon  a  new 
bank  the  necessity  of  coming  into  harmonious  rela- 
tions with  every  other  city  bank.  It  receives  in 
deposit  checks  on  them,  and  also  their  circulating 
bills ;  and  checks  on  itself  are  received  by  them  in 
like  manner.  The  only  avenue  to  exchange  is  through 
the  Clearing  House,  to  which  it  is  admitted  by  a  vote 
of  the  Association,  after  its  affairs  have  been  examined 
by  a  committee  of  that  body,  and  reported  "  sound." 
The  matters  inquired  into  by  the  committee  are, 
whether  the  capital  has  been  actually  paid  in,  and 
whether  the  general  organization  of  the  institution  is 
such  as  to  merit  public  confidence.  If  they  find  any 
cause  of  suspicion  on  these  points,  they  report 
adversely  to  the  admission  of  the  candidate ;  and  such 
is  the  influence  of  the  Clearing  House  with  the  public, 
that  this  would  be  a  serious,  if  not  a  fatal  blow  to  its 
credit.  On  the  other  hand,  a  favorable  report  would 
give  it  at  once  an  honorable  standing. 

The  executive  management  of  a  bank  is  vested  in  a 
Board  of  Directors,  who  select  one  of  their  number  to 
act  as  President.     The  dii-ectors  are  elected  annually 


20  INTBODUCTION. 

by  the  stockholders.  The  articles  of  association  gener- 
ally require  a  director  to  hold  not  less  than  a  certain 
number  of  shares  in  his  own  right,  on  the  presumption 
that  his  personal  interest  will  induce  him  to  look 
diligently  after  that  of  the  institution.  ^Nevertheless, 
it  is  common  for  half  the  members  of  a  bank  board 
to  become  irregular  in  their  attendance  at  the  meet- 
ings for  discounting  paper,  either  from  engrossment 
with  their  own  affairs,  or  because  they  have,  confi- 
dence in  other  managers ;  the  tendency  of  which  is 
to  throw  the  general  administration  of  the  bank  into 
the  hands  of  a  few  persons.  K  the  officers  are  very 
efficient,  the  few  are  apt  to  become  less  diligent,  see- 
ing that  the  routine  goes  on,  whether  they  are  present 
or  not.  This  concentration  of  power  takes  place  more 
or  less  in  all  our  city  banks.  The  average  number 
of  directors  to  each  is  about  thirteen,  of  whom,  in 
ordinary  times,  six  or  seven  attend  the  semi-weekly 
meetings.  In  a  dull  season,  the  number  is  often 
reduced  to  three  or  four.  Most  of  the  banks  have  in 
the  Board  several  retired  elderly  gentlemen,  who, 
having  nothing  else  to  do,  make  a  hobby  of  their 
office,  and  call  in  almost  daily  to  look  over  the  Dis- 
count Register,  and  to  discuss  the  merits  of  every 
commercial  name  for  the  fortieth  time.  To  tell  the 
truth,  they  are  capable  of  little  else,  and  they  often 
destroy  sound  character  by  mischievous  gossip. 

It  will  be  seen  in  the  statement  of  the  duties  of 
the  officers  how  naturally  tliey  acquire  exclusive  con- 
trol, when  they  are  competent  and  trustworthy ;  and 
it  is  a  frequent  observation,  that  the  business  of  a 
bank  is  more  successful  when  that  is  the  "case,  than 


TECHNICAL  TEEMS.  21 

when  the  directors  are  very  tenacious  of  their  execu- 
tive functions.  The  latter  give  their  attention  for 
a  single  hour,  on  two  days  of  the  week,  while  a 
list  of  discount  offerings  is  read  over;  whereas  the 
officers  devote  their  whole  time  to  obtaining  and 
sifting  the  information  by  which  their  judgment  is 
swayed. 

Bank  directors  are  chosen  for  their  wealth,  com- 
mercial experience,  and  influence  in  attracting  to  the 
institution  a  good  class  of  dealers.  If  they  fail  in 
business,  they  either  resign,  or  are  left  off  the  ticket 
at  the  subsequent  election.  If  they  continue  in  pros- 
perous circumstances,  and  act  harmoniously  together, 
the  same  set  are  annually  re-elected  for  a  long  series 
of  years.  They  own,  in  the  aggregate,  a  consider- 
able portion  of  the  stock,  and  they  hold  the  proxies  of 
personal  friends  who  take  no  direct  part  in  the  elec- 
tions. The  officers  generally  hold  the  proxies  of 
distant  stockholders — the  president,  especially. 

The  government  of  our  city  banks  is  remarkable 
for  unanimity  in  council.  It  is  seldom  that  the 
harmony  of  a  Board  of  Directors  is  disturbed  by 
dissension.  Parties  and  cliques  are  uniformly  fatal 
to  the  business.  They  drive  away  depositors,  and 
injure  the  public  standing  of  a  bank.  The  stock- 
holders sell  their  shares,  and  re-invest  their  money  in 
other  institutions. 

Most  of  the  technical  expressions  employed  by 
bankers  are  sufficiently  explained  by  their  connec- 
tion ;  but  some  have  various  applications,  and  some 
are  duplicates. 

The  terms  "  dealer,"  "  depositor,"  and  "  customer," 


22  mTKODUCTION. 

are  synonymous,  and  are  used,  as  to  frequency,  in  the 
order  named.     "  Dealer"  is  the  most  common. 

The  word  "  line"  applies  to  deposits,  and  loans  or 
discounts,  either  in  the  bank  total,  or  on  the  indi- 
vidual ledger.  The  officers  say  :  "  Our  deposit  line 
is  low,"  or  "  our  discount  line  is  full,"  in  reference  to 
the  aggregate  of  deposits  and  discounts.  "Our 
specie  line,"  refers  to  the  average  of  specie.  The 
dealer  also  says  :  "  My  discount  line  has  run  off,"  &c. 

There  are  a  number  of  slang  terms  and  phrases  in 
general  use,  which  would  fall  harshly  on  polite  ears, 
if  left  entirely  without  apology.  The  words  "  tight," 
"  easy,"  "  blue,"  "  short,"  "  tough,"  "  nervous,"  and 
their  synonyms,  contain  the  pith  and  significancy  of 
whole  sentences  of  ordinary  description,  and  are  com- 
mon among  all  classes  of  people — the  most  refined,  as 
well  as  the  most  uncultivated. 

The  author  has  no  other  apology  to  offer  for  con- 
versations that  may  appear  trifling  or  rambling,  than 
that  they  are  literally  true.  The  history  of  negotia- 
tion would  be  imperfect  without  them. 


THE  PKESroENT.  23 


CHAPTEK  n. 


THE       PRESIDENT 


The  PBEsroENT  is  the  chief  executive  officer  of  the 
bank.  He  presides  at  the  meetings  of  the  Board  of 
Directors,  and  to  a  great  extent  exerts  the  authority 
of  the  Board  in  its  recess. 

In  some  of  the  larger  banks,  there  is  a  stated  Vice- 
President  to  aid  him  in  his  duties,  and  to  assume  them, 
entire,  during  his  absence  ;  but  generally  a  President 
jpro  tern,  is  chosen  in  the  latter  case. 

In  all  legal  relations,  the  President  is  the  hank, 
though  still  subject  to  the  Board  of  Directors.  The 
title  of  any  real  estate  that  it  may  own  is  vested  in 
him,  and  his  official  signature  gives  title  by  convey- 
ance. 

He  is  plaintiff  or  defendant  in  suits  at  law. 

He  is  made  the  assignee  of  property  as  security  for 
debts  due  to  the  bank. 

He  signs,  with  the  Cashier,  all  certificates  of  stock 
issued  to  shareholders,  and  the  notes  or  bills  which 
are  paid  out  as  money. 

He  is  generally  a  large  stockholder,  and  is  the  only 
officer  connected  with  the  bank  who  does  not  give 
bonds  for  his  integrity  in  the  management  of  his  trust. 
His  identity  of  interest,  with  a  public  character  for 
uprightness,  and  the  circumstantial  guards  which  are 


24  THE   PKESIDENT. 

thrown  around  him,  are  held  to  be  a  better  assurance 
for  his  fidelity. 

The  salary  of  the  President  varies,  according  to  the 
time  and  labor  which  he  gives  to  the  business,  from 
two  or  three  to  ten  thousand  dollars  a  year.  In  some 
institutions,  he  is  a  diligent  and  laborious  ofiicer, 
entering  with  spirit  into  details,  and  making  himself 
acquainted  with  every  important  transaction.  In 
others,  he  is  satisfied  to  leave  details  to  the  Cashier 
and  the  subordinate  clerks,  holding  himself  rather  at 
a  distance,  and  cultivating  his  official  dignity. 

It  is  considered  desirable  that  the  President  should 
possess  an  independent  income,  and  be  free  from  the 
entanglements  of  trade.  Engagement  in  other  busi- 
ness would  distract  his  attention  from  the  bank,  and 
might  give  rise  to  a  conflict  of  interest.  Under  the 
pressure  of  personal  embarrassment,  with  the  means 
of  relief  in  his  official  hands,  even  a  rigid  sense  of 
duty  might  be  overcome.  The  highest  tone  of  senti- 
ment on  this  point  is,  therefore,  adverse  to  his  connec- 
tion with  the  hazards  of  commerce.  Yet  several  of 
our  most  prosperous  city  banks  have  always  been  pre- 
sided over  by  active,  enterprising  merchants. 

There  are  other  reasons  why  a  bank  president 
should  hold  himself  aloof  from  mercantile  business. 
With  large  capital  invested  in  a  particular  branch  of 
trade,  his  views  might  insensibly  become  narrow  and 
partial.  An  engrossing  special  interest  would  divert 
his  mind  from  the  close  study  of  credits  generally, 
and  make  his  judgment  less  clear,  as  the  condition  of 
commerce  becomes  more  critical.  In  a  season  of 
growing  stringency  in  the  money-market,  self-interest 


THE  BAJSTK  STATEMENT.  25 

compels  bank  directors,  in  common  with  others,  to 
withdraw  their  attention  from  all  affairs  but  their  own, 
and  thus  additional  responsibility  is  thrown  on  the 
officers  —  particularly  on  the  President.  The  dis- 
counting of  paper  is  then  less  strictly  confined  to  the 
sessions  of  the  Board.  It  is  spread  through  every  hour 
of  the  day,  with  specialities  and  importunities  which 
can  be  dealt  with,  only  individually  and  privately. 

A  bank  president  should  be  a  man  of  education 
and  general  knowledge.  The  accidents  of  the  office 
bring  him  into  contact  with  every  variety  of  disj)osi- 
tion,  and  with  all  the  different  pursuits  that  are  fol- 
lowed in  a  great  city.  He  ought,  therefore,  to  be 
sagacious  in  observing  character,  and  to  have  a 
practical  acquaintance  with  modes  of  business.  He 
should  also  be  familiar  with  the  principles  and  prac- 
tice of  bookkeeping ;  otherwise,  he  may  be  blinded 
to  any  extent  by  the  vast  accumulation  of  figures,  and 
the  changes  which  they  perpetually  undergo  in  bank 
accounts.  It  is  impossible  for  the  executive  officers 
to  follow  all  these  changes  in  detail  from  day  to  day. 
A  summary  of  the  condition  of  the  bank  is,  therefore, 
made  up  by  one  of  the  clerks,  showing  all  its  assets 
and  liabilities,  and  enabling  them  to  judge  of  the 
extent  to  which  bills  may  be  discounted.  This  is 
called  the  Bank  Statement.  It  is  generally  prepared 
twice  a  week,  for  use  at-  the  meetings  of  the  Board  of 
Directors  ;  but  in  some  of  the  larger  banks,  the  foot- 
ings of  the  several  accounts  composing  it  undergo 
Buch  material  changes  as  require  it  to  be  made  up 
every  day.  These  footings  have  a  mutual  relation 
which  must  be  preserved ;  they  are  correlative  also 

2 


26  PRESIDENT   AJfD   BOARD   OF   DIRECTORS. 

with  the  general  aggregates  of  the  market,  as  will  be 
apparent  in  a  description  of  the  Clearing  House  settle- 
ments. 

The  Directors  of  the  hank  depend  on  the  President 
to  explain  to  them  the  particular  bearings  of  this 
Statement.  They  are  occupied  during  the  recess  of 
the  Board,  each  with  his  private  affairs,  and  their 
views  of  the  market  are  influenced  by  the  condition 
and  accidents  of  trade  in  their  respective  circles ;  but 
the  President  observes  the  whole  field  of  commerce, 
taking  cognizance  of  the  general  catises  of  ebb  and 
flow  in  the  financial  tides.  He  examines,  not  only  the 
immediate  capacity  of  the  bank,  but  also  its  contin- 
gent resources  and  liabilities.  He  watches  the  course 
of  the  exchanges  in  the  Clearing  House,  and  the 
wider  currents  of  trade  beyond,  endeavoring  to  weigh 
the  probabilities  for  the  future  in  the  vast  specula- 
tions which  rise  before  him.  He  observes  the  ship- 
ment of  coin  to  foreign  countries,  compares  the  im- 
ports and  exports  of  successive  years,  and  so  works 
his  figures  into  the  great  sum  of  the  combined  markets 
of  the  world.  To  a  man  unskilled  in  accounts,  the 
figures  of  this  prodigious  sum  are  as  unintelligible  as 
characters  in  an  unknown  tongue. 


THE   PRESIDENT,    AND  THE  BOARD  OF  DIRECTORS. 

The  regular  meetings  of  the  Board  of  Directors  are 
held  twice  a  week.  Generally,  the  principal  business 
transacted  is  the  discounting  of  promissory  notes,  and 
the  loaning  of  money  on  securities ;  but  this  often 


DKCOUNTING  NOTES.  27 

involves  a  good  deal  of  discussion.  The  circumstances 
of  merchants,  their  standing  in  the  community,  the 
character  of  the  trade  in  which  they  are  engaged,  the 
credit  of  persons  whose  notes  they  oifer  for  discount, 
the  state  of  the  market,  the  value  of  securities,  and 
whatever  concerns  the  safety  of  the  bank  dealings, 
are  subjects  of  conversation  and  scrutiny  in  these 
semi-weekly  meetings. 

The  President  is  seated  at  the  head  of  a  table,  and 
the  Cashier  opposite,  or  by  his  side,  as  may  be  most 
convenient.  The  Directors  are  seated  around  it,  as  at 
a  dining-table.  In  some  banks,  considerable  formality 
is  observed  in  this  arrangement,  members  having 
particular  chairs.  A  place  next  to  the  President  may 
be  accorded  to  the  oldest  or  most  influential.  In 
other  banks,  the  arrangement  is  determined  by  acci- 
dent or  habit. 

The  Cashier  reads  the  minutes  of  the  previous  meet- 
ing of  the  Board,  and  they  are  approved  in  the  usual 
form.  He  records  the  name  of  each  dii'ector  in  attend- 
ance, that  questions  of  disputed  responsibility,  as  to 
particular  measures,  may  not  arise  in  the  future. 

The  business  transacted,  during  the  recess  of  the 
Board,  is  submitted  at  each  meeting.  Some  bank 
officers  are  very  particular  to  have  all  discounts  and 
negotiations  which  are  made  by  their  personal  discre- 
tion, sanctioned  by  a  vote  of  the  Directors — a  wise 
precaution  for  themselves,  and  a  good  guarantee  for 
the  stockholders.  The  practice  is  irregular  with 
respect  to  this  revision.  It  is  apt  to  be  passed  over 
rather  lightly,  especially  if  the  officers  stand  very  high 
in  the  esteem  of  their  associates ;  but  it  ought  to  be 


28  PRESIDENT  AND  BOAED  OF  DEKECTORS. 

remembered,  that  greater  aggregate  loss  has  resulted 
to  banks  from  unwise  or  dishonest  conduct  on  the 
part  of  the  superior  officers,  than  from  dereliction  in 
any  other  quarter.  Numerous  instances  are  on  record, 
of  institutions,  with  large  capital  and  thriving  busi- 
ness, being  crippled  for  years,  or  forced  upon  insol- 
vency, by  trusting  too  much  in  the  hands  of  the 
President  or  Cashier.  It  should,  therefore,  be  an 
absolute  rule  of  the  Directors  to  revise  the  business 
transacted  between  the  Board  meetings,  with  the 
same  rigid  scrutiny  that  they  give  to  that  which 
comes  up  at  the  regular  sessions. 

The  Discount  Register,  which  is  the  book  of  origi- 
nal entry  for  all  paper  discounted,  is  commonly 
placed  on  the  table,  and  if  not  specially  referred  to 
by  the  President,  is  open  to  any  director  for  inspec- 
tion. Likewise,  the  Loan  Book,  if  this  is  kept  sepa- 
rately from  the  Register. 

The  Statement,  or  such  portions  of  it  as  are  neces- 
sary to  show  the  extent  to  which  paper  may  be 
discounted,  is  read  by  either  officer.  The  aggregate 
of  loans,  deposits,  and  specie,  are  enough  for  this 
purpose.  The  reading  of  other  items  is  generally 
dispensed  with,  as  they  do  not  materially  affect  the 
state  of  the  funds.  The  book  is  left  within  reach  of 
directors  who  may  wish  to  examine  it  more  critically. 

Tlie  President  announces  his  judgment  : 

"  Gentlemen,  the  condition  of  the  bank  is  favor- 
able. Our  liquidations  have  been  prompt  since  the 
last  meeting  of  the  Board.  We  have  no  protests,  and 
the  market  is  quiet.  The  amount  of  notes  offered 
to-day  is  about  four  hundred  thousand  dollars ;  and  I 


DISCOUNTING  NOTES.  29 

am  liapp7  to  say  that  we  can  discount  the  whole,  if 
they  are  satisfactory." 

The  Offering-Book,  with  an  alphabetical  record  of 
the  notes,  lies  open  on  the  table  before  the  President. 
The  Cashier  has  the  package  of  notes  in  corresponding 
order,  prepared  to  open  each  envelop,  and  to  state 
particulars : 

"The  first  offering,  Mi*.  President,  is  by  Adams, 
Jones  &  Co.  Their  notes  are :  one  of  James  Wilson, 
having  seventy  days  to  run,  of  sixteen  hundred  dol- 
lars ;  and  one  of  Thompson  &  Moore,  forty-five  days 
to  run,  of  twenty-five  hundred  dollars." 

James  Wilson  is  a  well-known  merchant,  of  capital 
and  integrity.  Several  of  the  Directors  express  their 
judgment  in  favor  of  discounting  his  note.  No  objec- 
tion is  made,  and  the  President  scores  opposite  to  it, 
on  the  Offering  Book,  the  letter  A — which  means, 
accepted. 

Thompson  &  Moore  are  not  known,  or  but  slightly. 
The  indorsers,  Adams,  Jones  &  Co.,  are  entirely 
responsible,  and  would,  doubtless,  pay  the  note 
promptly,  if  the  drawers  should  fail;  but  it  is  an 
established  rule  of  the  bank,  that  no  paper  shall  be 
discounted  without  at  least  one  good  name  besides 
that  of  the  indorser. 

"  Gentlemen,  who  knows  Thompson  &  Moore  ?" 
The  Directors  enter  into  a  free  conversation,  which, 
if  the  parties  are  merchants  of  long  standing,  is  likely 
to  elicit  enough  information  to  cause  the  note  to  be 
accepted,  or  rejected.  Or,  it  may  be  referred  to  the 
ofiicers,  with  discretion  to  act  as  their  judgment  may 
dictate  on  further  inquiry. 


30  PRESroENT  AND  BOARD  OF  DIKEOTOKS. 

The  Cashier  reads  offering  number  two,  by  Bailey 
&  Rush.  This  firm  are  in  high  credit  with  the  bank, 
and  their  paper  is  of  the  first  class.  "Note  of 
Sears  &  Co.,  three  months  to  run,  eighteen  hundred 
dollars ;  and  one  of  C.  Jackson,  sixty  days  to  run,  for 
four  thousand  five  hundred  dollars." 

"  Gentlemen,"  says  the  President,  "  if  no  objection 
is  made,  I  will  mark  the  notes  of  Bailey  &  Rush, 
accepted.  It  is  done.  Let  us  have  the  next  in  order, 
Mr.  Cashier." 

"  Joseph  Chambers  offers  a  draft  of  Green  &  Davis, 
of  San  Francisco,  on  Thrush  &  Co.,  of  New  York,  and 
accepted — at  seventy-five  days,  for  five  thousand  dol- 
lars." 

It  is,  perhaps,  the  first  time  that  the  paper  of 
Thrush  &  Co.  has  been  offered  for  discount  in  the 
bank.  The  President  is  entirely  unacquainted  with 
it.     He  asks  for  information. 

Mr.  Breckenridge  knows  something  about  them : 
"  They  began  business,  a  year  ago,  with  thirty  thou- 
sand dollars  capital — are  said  to  have  done  a  profit- 
able trade  in  the  produce  line — ^had  shipped  heavily 
to  California.  The  Co.  was  a  young  man  who  come 
out  of  Bacon's — the  big  packers  on  "West  street. 
Guess  he  hadn't  much  money — say,  five  thousand 
dollars  ;  but  very  smart.  Thrush  was  the  capitalist. 
Put  in  twenty-five  thousand  dollars,  hard  cash — 
about  all  he  had." 

"  What  age  is  he  ?" 

"  Thirty-five  to  forty." 

"Man  of  family?" 

"Oh  yes!   I've  known  him  these  twelve  years.  Got 


DISCOUNTmG  NOTES.  81 

half  a  dozen  cMdren.  You  must  know  him,  Mr. 
Groull  !  He  married  Stubbles's  daughter,  wine 
merchant,  there  at  your  corner.  Guess  he  run  away 
with  her,  and  made  the  old  man  mad.  But  they're 
all  reconciled  long  ago,  and  now  he's  Stubbles's  prin- 
cipal adviser  in  them  new  stores  he's  building  in  Mur- 
ray street." 

"Is  that  the  man?" 

"  That's  the  man,  sir." 

"  Well,  who  married  Stubbles's  other  daughter  ?" 

The  President  warns  gentlemen  that  they  had  bet- 
ter not  wander  too  far  from  the  subject.  The  matter 
before  the  Board  is,  whether  Mr.  Thrush's  note  is  good 
enough  to  be  discounted. 

"  You  said  he  was  in  the  California  business,  Mr. 
Breckenridge  ?" 

"  Yes,  sir.  Made  some  very  successful  shipments 
there  last  Spring." 

"  I've  got  mighty  little  confidence  in  California  I" 
says  Mr.  Groull,  "  mighty  little !" 

"  It's  a  good  way  off,  that's  a  fact,"  adds  Mr.  Breck- 
enridge. "  I'd  rather  do  business  with  people  that 
trade  near  by." 

Mr.  Groull  speaks  again.  "  "Wouldn't  touch  it  with 
a  ten-foot  pole.  Bad  line.  Let  it  slide,  Mr.  Presi- 
dent.    We  can  do  better  with  our  money." 

Some  of  the  Directors  may  have  been  listening  in- 
differently to  this  rambling  conversation ;  but  the 
majority  are  otherwise  engaged.  One  has  seized  on  a 
morning  paper,  and  all  his  thoughts  are  engrossed  by 
the  latest  news  from  Em'ope.  Another  has  just  taken 
a  fit  to  examine  the  Statement  Book,  and  several  are 


P.O. 


PKESroENT   AND   BOAUD   OF  DIEECTORS. 


talking  on  their  real  estate  prospects.  Messrs.  Breck- 
enridge  and  Groull  make  themselves  heard  above  the 
suppressed  confusion  of  other  voices.  The  President 
has  tapped  on  the  table  with  his  pencil,  but  failed  to 
restore  order.  To  a  person  outside  of  the  door,  it 
would  seem  as  if  the  members  were  engaged  in  a 
general  wrangle.  Meanwhile,  Mr.  Marks,  with  a 
lively  perception  of  the  ludicrous,  and  skill  enough 
to  prove  that  he  is  not  now  practicing  for  the  first 
time,  has  sketched  sundry  odd  figures  on  the  blank 
page  of  a  "  tickler,"  and  finishes  by  a  caricature  of 
the  two  gentlemen  above  named,  which  he  shows  to 
his  neighbor,  and  he  to  the  next ;  and  then  follows 
an  explosion  of  laugliter,  which  breaks  up  all  other 
distractions  of  the  Board,  and  finally  gives  the  Pre- 
sident a  chance  to  be  heard. 


DIVEKSIONS   OF  DIKECTOKS.  3S 

"  Come,  gentlemen,  come,  come !  we  shall  never 
get  through  our  work  at  this  rate." 

But  the  President  must  have  his  laugh  too ;  after 
which,  the  members  fall  into  comparative  order  and 
silence. 

Such  a  scene  as  this  is  neither  extravagant  nor 
unusual.  The  directors  of  a  bank,  like  boys  at 
school,  gradually  get  rid  of  personal  restraints,  when 
they  come  together,  and  join  heartily  in  a  "  little 
fun."  And  why  not  ?  To  be  always  grave  and  dig- 
nified is  next  door  to  being  reserved  and  dull — which 
would  make  their  meetings  irksome,  and  lead  to  their 
being  shunned  as  "  a  bore."  It  does  not  follow,  that 
the  real  interests  of  the  institution  are  treated  with 
less  serious  consideration  than  they  deserve. 

The  Cashier  now  informs  the  Board,  that  Mr. 
Chambers  had  called  on  him,  and  stated  the  capital 
of  Thrush  &  Co.  to  be  unimpaired.  They  were  pru- 
dent men,  and  stood  in  deservedly  high  estimation  ; 
had  but  little  paper  out ;  could  buy  any  amount  of 
merchandise  on  credit,  and  so  forth.  He  adds,  also, 
that  the  dealings  of  Mr.  Chambers  with  the  bank 
had  always  been  liberal  and  honorable.  Owned  con- 
siderable real  estate ;  was  known  to  have  a  large 
capital,  and  to  be  prudent  in  his  credits.  Had 
nothing  under  discount ;  and  his  average  balance  of 
deposit  was  seldom  less  than  six  or  eight  thousand 
dollars.  "  "We  ought  not,"  he  concludes,  "to  reject 
his  offering  without  good  reason." 

"  Mr.  Cashier,  would  you  discount  California  paper  ?" 

"  Yes,  sir,  if  it  is  good." 

"  If !    You  may  well  say  that !    But  California  is 
2* 


34  PRESIDENT  AND  BOARD   OF   DIRECTORS. 

not  good.      Not  to  be  trusted,  sir!    Too  far  off! 
T'other  side  of  the  world  !" 

"  What's  the  matter,  Mr.  President  ?  What's  the 
business  before  the  Board?"  asks  Mr.  Marks,  sud- 
denly, with  an  air  of  breaking  loose  from  some 
engrossing  abstractions.  "What  are  you  talking 
about,  Mr.  Cashier  ?" 

"  Mr.  Marks,"  answers  the  President,  "  we've  been 
discussing  the  standing  of  Mr.  Joseph  Chambers,  and 
of  Thrush  &  Co.,  and  their  sons-in-law  and  family 
relations  generally.  K  you  had  been  attending  to 
your  duty,  sir,  you  need  not  have  asked  the  ques- 
tion." 

"  Didn't  hear  a  word  of  it." 

"  N"o,  su* ;  so  it  seerhs.  What  have  you  got  to 
say?" 

"  Joseph  Chambers  is  first-rate.  I  know  all  about 
him,  from  his  toes  up  to  his  hat.  Good  as  wheat. 
Worth  over  a  hundred  thousand  dollars.  It'll  never 
do  to  reject  his  paper  1" 

Several  other  directors  express  themselves  favor- 
ably to  the  discount  of  it.  There  is  also  some  con- 
firmation of  the  good  reports  of  Thrush  &  Co. 

Mr.  Starr  insists  that  a  man  must  not  bo  repudiated 
as  unworthy  of  credit,  because  he  deals  witli  Cali- 
fornia, any  more  than  if  he  were  trading  with  Mexico 
or  South  America.  "  If  there  is  any  specific  cause  of 
discredit,  let's  have  it  out." 

The  President  announces,  that  objection  being  with- 
drawn, the  note  of  Thrush  &  Co.  is  marked  with  the 
letter  A.  The  formality  of  a  vote  is  not  common  in 
determining  the  discount  of  paper ;  the  usual  prac- 


DISCOTTNTING  NIDTES.  35 

tice  being  to  decline  it  in  the  face  of  serious  opposi- 
tion, even  by  a  small  minority.  In  other  words,  the 
general  and  harmonious  sense  of  the  Board  is  preferred 
to  the  mere  majority  rule  in  disputed  cases.  'No  pru- 
dent director  will  urge  particular  claims  against  the 
prevailing  judgment  of  his  associates. 

The  several  next  offerings  in  succession  may  be  by 
dealers  of  established  credit  with  the  bank,  whose 
paper  is  well  known.  They  are  marked  by  the  Presi- 
dent with  the  letter  A,  nearly  as  fast  as  the  Cashier 
reads  them  off,  if  no  objection  is  interposed. 

The  next  is  one  of  a  less  usual  class.  The  large 
dry-goods  house  of  Merrimack  &  Slater  wants  a 
discount  of  twenty-five  thousand  dollars.  They  offer 
notes,  which  the  Cashier  reads  off  as  follows  : 

White  &  Marshall,  thirty-five  days  to 

run $2,576.15 

Eobert  Hancock,  forty  days       .         .  5,250.00 
Wellington,  Fairfax  &  Co.,  forty  days,    8,976.40 

Osborn  &  Wells,  two  months     .         .  15,75.00 

Conrad  &  Co.,  three  months     .         .  4,150.25 

'      Oakford  &  Smith,  four  months  .         .  2,960.00 

The  President  waits  a  moment  for  some  indication 
of  opinion  from  the  directors,  although  he  may  have  a 
decided  judgment  in  the  case. 

Mr.  Cassimer,  a  leading  merchant  in  the  dry-goods 
line,  suggests  that  there  can  hardly  be  any  doubt  as 
to  the  disposition  of  that  paper.  "  ITothing  better  in 
the  market,  and  no  better  customer  in  the  bank.  I 
s'pose  you'll  have  to  pass  the  whole,  Mr.  President." 


36  PRESroENT   AND   BOAED   OF   DIEECTOES. 

"  Too  big,"  Bays  Mr.  Groull.  "  Twenty-five  thousand 
dollars!  I'd  rather  divide  it  among  twenty-five 
difi"erent  persons,  than  give  it  all  to  one.  Bad  policy 
— these  big  licks !" 

Another  dii*ector  proposes  to  discount  the  half, 
rejecting  the  long  paper.  "Some  of  it,"  says  he, 
"  has  four  months  to  run.  All  good,  no  doubt ;  but 
twenty-five  thousand  dollars  is  a  large  sum." 

A  pause  in  the  conversation. 

Director  Kent,  also  in  the  dry-goods  business, 
admits  the  sum  to  be  large  ;  but  reminds  the  Board, 
that  "  the  men  are  large.  Don't  they  keep  nearly 
that  amount  on  deposit  in  the  bank,  Mr.  President  ? 
They  are  literally  asking  us  to  loan  them  their  own 
money.  They  can  take  the  paper  to  any  bank  in  the 
city,  and  get  it  passed  at  a  word ;  and  they  will  be 
likely  to  do  so,  if  you  reject  or  change  their  offering. 
You  don't  want  to  lose  their  custom,  do  you  ?" 

"  No,  sir,"  answers  the  President.  "  It  is  the  policy 
of  the  bank  to  treat  this  class  of  accounts  in  the  most 
liberal  manner.  They  have  nothing  under  discount 
at  present.  "We  ought  to  pass  the  paper  at  once,  to 
their  credit.  I  hope  objections  will  be  withdrawn. 
Do  I  so  understand  it  ?  The  Board  acquiesces,  and  I 
will  mark  it,  accepted.  The  next  in  order,  Mr. 
Cashier !" 

"  Shultz  &  Cooper  offer  three  notes — Jacob  Lis- 
ten, forty-five  days,  six  hundred  dollars ;  and  two 
notes  of  Cobb  &  "Walker,  each  one  hundred  and 
fifty,  at  two  and  three  months." 

Director  Groull  wants  to  know  "  where's  the  use 
of  taking  up  time  with  that  class  of  customers  ?    They 


DiscouNTma  notes.  37. 

apply  every  offering-day,  and  keep  no  balance  of 
account.    Let  'em  slide." 

"  Has  their  account  improved  any  of  late,  Mr. 
Cashier?" 

"  Not  much,  sir.  They  keep  a  balance  of  one  or 
two  hundred  dollars,  and  have  a  thousand  under  dis- 
count." 

"  Letter  R.    Let's  have  the  next." 

"Hold  on,  Mr.  President !  ISTot  too  fast.  These 
small  men  are  of  use  to  us.  They  ought  not  to  be  dis- 
carded too  abruptly.  They  really  want  the  money. 
Give  'em  that  little  note  of  six  hundred  dollars.  It 
will  do  them  more  good  than  twenty-five  thousand 
does  to  Merrimack  &  Slater." 

An  agreeable  personal  acquaintance  between  the 
dealer  and  the  director  is  the  ground  of  this  favor. 
The  note  is  discounted  at  the  request  of  Mr.  Miller ; 
none  of  his  associates  deeming  it  worth  while  to  press 
an  opposition  in  such  a  trifling  case.  But  this  class 
of  applicants  receive  no  consideration  when  there  is  a 
pressure  of  more  deserving  customers. 

Among  the  offerings,  is  one  by  John  Tillotson  & 
Co.,  who  "  respectfully  propose"  the  note  of  Phineas 
Crowfoot,  three  months  to  run,  six  hundred  dollars ; 
and  one  of  Thomas  Noble,  sixty  days,  three  hundred 
and  fifty.  The  offerers  have  no  personal  friend  at 
the  Board,  to  speak  promptly  and  to  say :  "  I  know 
them.  They  are  good,  and  ought  to  be  accommo- 
dated." But  Director  Buttonwood,  who  attends  the 
meetings  once  a  month  by  convenient  accident,  asks : 

"  "Who  are  Tillotson  &  Co.  ?  Aint  they  the  concern 
that  broke  a  year  or  two  since,  and    compromised 


("«' 


i«6a09 


38  PRESIDENT  A2fD   BOAKD  OF   DIKECTOES. 

with  their  creditors  at  twenty  cents  on  the  dollar  ?  I 
wouldn't  discount  any  paper  for  a  broken-down  dry- 
goods  retailer." 

"They  are  not  in  that  business,"  answers  the 
Cashier.  "  They  are  crockery-dealers,  and  have  kept 
a  fair  balance  of  account  in  the  bank  for  several  years, 
asking  no  more  than  reasonable  accommodations. 
Their  capital  was  originally  ten  thousand  dollars,  and 
they  have  probably  doubled  it  in  trade." 

"  How  much  have  they  under  discount  ?" 

"  Twenty-five  hundred  dollars." 

"  And  what's  their  average  balance  ?" 

"  From  eiglit  hundred  to  a  thousand." 

Mr.  Buttonwood  thinks  he  has  a  right  to  talk  more 
than  any  other  member,  to  ask  more  questions,  and  to 
suggest  more  doubts  of  the  solvency  of  dealers,  be- 
cause he  doesn't  trouble  the  Board  often  with  his 
presence.  "  He  wants  to  be  thoroughly  posted  up. 
You  don't  expect  him  to  give  his  voice,  as  a  director 
of  this  banlc,  in  favor  of  discounting  people's  notes, 
without  knowing  what  they  are,  do  you  ?  He  has  a 
higher  sense  of  his  duty  to  the  stockholders  than 
that !" 

Mr.  Buttonwood's  sense  of  duty  revolves  about  a 
very  small  point  within  himself.  He  looks  after  the 
interests  of  the  stockholders,  perhaps  on  twelve 
several  occasions  of  an  hour  each,  during  as  many 
months.  He  cannot  afford  to  withdraw  his  attention 
for  a  longer  time  from  his  private  affairs.  Conse- 
quently, when  he  comes  to  the  bank,  he  is  ignorant 
of  the  state  of  its  business  and  of  the  standing  of  its 
dealers.     But  his  sense  of  duty  will  not  allow  him  to 


am.    BUTTONWOOD.  30 

countenance,  by  his  bare  presence,  the  discounting  of 
paper  with  which  he  is  unacquainted.  He  has  adopted 
the  notion  that  all  the  losses  of  banks  come  from  the 
officers  and  directors  being  unable  to  say,  "  no." 
They  are  either  too  easy,  or  they  have  "got  their 
hand  in  the  lion's  mouth,  and  dare  not  draw  it  out." 
He  concentrates  on  the  few  occasions  on  which  he  is 
present,  the  churlishness  and  the  caprice  that  might 
be  less  intolerable  if  spread  over  a  longer  period.  He 
obliges  the  officers  to  explain,  for  the  twentieth  time, 
the  circumstances  of  individual  dealei-s,  their  capital, 
extent  of  business,  and  so  forth.  His  associates  in  the 
Board  submit,  out  of  politeness,  whilst  inwardly  wish- 
ing that  he  would  absent  himself  entirely  from  their 
meetings. 

Every  Board  of  Directors  has  one  or  more  of  this 
narrow-minded  and  self-conceited  class  in  its  compos- 
ition. They  do  not  get  rid  of  them  at  the  annual 
election  because  of  the  fear  of  giving  personal  offence, 
and  making  outside  gossip  injurious  to  the  interests 
of  the  bank.  Or  there  may  be  less  creditable  grounds 
of  conciliation  connected  with  the  management  of  its 
affairs,  which  might  be  exaggerated  or  perverted  for 
a  malicious  purpose  by  a  disaffected  man.  It  is  hardly 
possible  to  constitute  a  Board  of  Managers,  represent- 
ing, the  different  interests  of  trade,  without  a  mixture 
of  the  Buttonwood  mould;  and  this  is  often  the 
source  of  injury  to  the  more  obscure,  but  still  deserv- 
ing credits  that  enter  into  the  business. 

It  is  one  of  the  duties  of  the  President  to  protect 
the  dealer  when  he  is  unjustly  assailed;  and  it  is 
directly  for  the  advantage  of  the  bank.     Besides  the 


40  PKESroENT  AND  BOARD   OF  DIKECTORS. 

general  results  of  the  fair  treatment  of  credit,  there 
is  this  particular  result ;  that  the  best  class  of  cus- 
tomers that  a  bank  can  have,  consists  of  those  whom 
it  has  nurtured  from  moderate  to  larger  success,  and 
whose  experience  has  been  all  along  linked  in  agree- 
able intercourse  with  its  officers  and  directors.  These 
are  not  easily  seduced  to  open  accounts  with  other 
banks  ;  but  they  are  faithful  to  their  old  friends,  and 
they  introduce  other  dealers. 

If  Mr,  Buttonwood  persists  in  opposing  the  discount 
of  Tillotson  &  Co.'s  paper,  the  President  adds  his  tes- 
timony to  that  of  the  Cashier,  and  calls  on  the  direc- 
tors for  any  information  they  are  able  to  give. 

Director  Piatt  knows  Crowfoot. — "  He  is  perfectly 
good,  keeps  a  retail  store  on  Canal  street.  I  would 
sell  him  two  or  three  thousand  dollars  of  merchandise 
on  credit,  without  hesitation." 

"  "What's  his  capital  ?  What  do  you  know  about 
that  ?"  asks  Director  Buttonwood  again. 

"  Nothing  very  specific.  Only  the  man  has  kept 
store  there  many  years,  and  is  in  fair  credit." 

"Then  let  his  paper  go.  What  do  we  want  with 
the  notes  of  people  that  have  no  capital  ?" 

"  What  do  you  call  capital,  Mr.  Buttonwood  ?  Isn't 
stock,  established  business,  ability,  and  good  credit, 
very  substantial  capital?  What  Crowfoot  has,  is 
invested  in  these.  Has  he  not  frequently  paid  notes 
at  our  counter,  Mr.  Cashier  ?" 

"  Yes,  many  a  time." 

"  Has  the  bank  ever  discounted  any  of  them  for 
Mr.  Tillotson,  or  other  dealers  ?" 

The  Cashier  turns  to  the  Discount  Bill  Book,  where 


DisconNTma  notes.  41 

lie  finds  a  record  of  all  the  paper  passed  to  the  credit 
of  Tillotson  &  Co.  for  two  years,  and  the  notes  of 
Phineas  Crowfoot  recurring  at  intervals  during  that 
time.    He  adds : 

"  We  have  had  as  high  as  seventeen  hundred  dollars 
of  these  notes  under  discount  at  once,  and  now  have 
none." 

Director  Potts  is  half  impatient  with  this  protracted 
discussion.  "  Mr.  President,"  he  says,  "  I  know  both 
Tillotson  and  Crowfoot.  I  would  as  soon  trust  either 
of  them  three  thousand  dollars  in  trade  as  I  would 
any  member  of  this  Board.  "Where's  the  use  of  con- 
suming so  much  time  about  so  small  a  matter  ?  Mr. 
Buttonwood  knows  more  about  the  price  of  sugar 
than  about  crockery  credits.  Pass  the  paper,  and 
let's  go  on  with  the  business." 

This  being  manifestly  the  general  sentiment  of  the 
Board,  the  President  marks  it  accepted,  and  requests 
the  Cashier  to  go  on. 

"  Robert  Thompson  offers  a  note  of  Samuel  Price 
for  three  thousand  dollars,  sixty  days  to  run." 

Price  is  known  to  be  a  retired  merchant  of  large 
wealth.  Thompson  gives  his  name  as  security  instead 
of  his  country  business  paper.  Director  Brecken- 
ridge  objects  to  it,  on  the  ground  that  it  is  "  accom- 
modation paper." 

Then  for  the  hundredth  time,  perhaps,  comes  up 
a  discussion  as  to  what  constitutes  accommodation 
paper,  and  the  impropriety  of  banks  discounting  it  on 
any  terms.  Without  reaching  a  decision  on  this 
contested  point,  the  directors  are  satisfied  that  the 
note  of  Mr.   Price  is    "  fire-proof,"  and  Thompson 


42       PRESIDENT  AND  BOAED  OF  DIEEOTOKS. 

keeping  a  good  account,  is  entitled  to  the  credit. 
The  President  announces  that  he  has  marked  it, 
accepted. 

Thornton  &  Whitaker,  iron  dealers  and  manufac- 
turers, inclose  twelve  thousand  dollars  of  their  busi- 
ness paper  as  collateral  to  their  own  note  for  ten 
thousand  dollars  at  ninety  days.  The  house  is  so 
favorably  Icnown  as  to  preclude  discussion ;  but  on 
the  suggestion  of  one  of  the  directors,  the  term  of  the 
discount  is  changed  from  ninety  to  sixty  days. 

White  &  Co.  offer  several  notes  for  discount. 
Director  Crotchitt  has  anr  indistinct  notion  that  "  those 
fellows  have  been  dealing  pretty  largely  in  railroad 
stock.  Can't  say  with  certainty,  but  if  the  Board  will 
let  that  stand  over,  he'll  get  the  information,  and 
report  to  the  officers." 

John  Wilson  offers  his  note  at  sixty  days  for  five 
thousand  dollars,  with  one  hundred  and  ten  shares  of 
the  Salamander  Fire  Insurance  Co.  as  collateral. 

"  Good  security,  Mr.  President.  That  stock  is  at  a 
premium  of  ten  or  twelve  per  cent.  Wilson  is  a  fair 
man,  and  I  guess  his  account  deserves  it. 

ISTo  objection  is  made,  and  the  President  marks  it 
with  the  letter  A. 

Young,  Sterling  &  Co.,  heavy  sugar-dealers,  offer 
several  J^ew  Orleans  drafts  for  discount.  They  are 
accepted  by  parties  residing  in  New  York. 

Cranston  &  Thomas,  on  Charles  Bancroft,  $10,000 

William  English,        "  Eussell  &  Co.     .     .  7,600 

Do.                    «  Perry  &  Co.       .     .  15,000 

T.  Robinson                "  Smith  &  Wheeler  .  10,000 


DISCOUNTraG  NOTES.  43 

The  firm  has  already  under  discount  twenty-five 
thousand  dollars,  and  their  average  balance  of  account 
is  forty  thousand. 

The  President  infonns  the  Board,  that  Mr.  Young 
had  called  on  him,  personally,  to  say  that  the  object 
of  so  large  an  offering  is  to  provide  for  their  payments 
through  the  coming  month,  and  that  the  proceeds  wiU 
be  drawn  out  gradually. 

"  Tou  don't  mean  to  discount  the  whole  forty  thou- 
sand at  once,  do  you,  Mr.  President?" 

"That  is  for  the  Board  to  determine.  Young, 
Sterling  &  Co.,  are  among  our  wealthiest  dealers. 
They  have  a  capital  of  one  million  of  dollars,  inde- 
pendent of  the  private  property  of  the  partners,  which 
would  sell  for  as  much  more.  The  proportion  of  their 
current  balance  with  their  discount-line,  entitles 
them  to  the  highest  consideration." 

While  the  President  is  speaking,  the  drafts  are 
passed  from  hand  to  hand,  and  examined  by  the 
directors.  The  general  tenor  of  remark  is  favorable 
to  the  offering,  as  a  whole.  The  principal  peculiarities 
of  the  sugar-business  are  recited — how  the  prospects 
of  the  growing  crop  are  speculated  upon — how  the 
market  is  sometimes  controlled  by  a  few  operators  in 
concert  with  the  great  sugar-houses  of  New  Orleans 
or  Cuba,  and  prices  kept  up  or  allowed  to  decline, 
until  the  moment  comes  for  combined  action,  and  so 
forth.  It  is  suggested  that  all  the  sugar-men  must 
have  incurred  prodigious  losses  by  the  recent  fall  of 
thirty  per  cent ;  and  that  even  at  present  prices,  there 
is  room  for  a  decline  of  nearly  as  much  more. 

Mr.  Buttonwood,  who  deals  largely  in  sugars,  says, 


44  PEESroENT  AND  BOAED   OF  DIEECTOES. 

that  no  matter  what  the  decline  is,  Young,  Sterling 
&  Co.,  are  above  all  casualty.  His  objection  to  dis- 
counting large  amounts  of  paper,  so  freely  expressed 
when  dry-goods  houses  are  in  question,  vanishes  when 
the  sugar-trade  calls.  The  dry-goods  directors  are 
less  likely  to  be  influenced  by  prejudice  against  par- 
ticular branches  of  business  than  any  other  class  of 
merchants.  Their  habit  of  longer  and  larger  credits, 
if  more  dangerous,  is  also  more  liberalizing  than  deal- 
ing in  the  shorter  credits  of  the  grocer.  They  are 
seldom  found  in  the  opposition  to  such  offerings  as 
that  of  Young,  Sterling  &  Co.,  when  the  condition 
of  the  bank  will  admit  of  their  discount. 

Mr.  Cassimer  is  in  favor  of  passing  all  the  drafts 
to  the  credit  of  the  offerers. 

The  President  wants  a  general  expression  by  the 
Board  for  such  large  operations.  "  The  house  is  rich, 
gentlemen,  beyond  a  doubt.  But  you  must  remem- 
ber, that  no  house  is  exempt  from  great  losses  on  a 
falling  market.  The  transactions  in  sugar  have  been 
excessively  inflated  within  the  last  few  weeks.  I 
called  on  a  friend  in  that  line  of  business  yesterday, 
and  he  related  to  me  some  facts  that  you  ought  to  be 
made  aware  of.  Four  or  five  houses  bought  up  sugar 
to  the  amount  of  one  hundred  and  forty  thousand  dol- 
lars, giving  their  notes  at  six  months  in  payment. 
They  held  it  a  week,  and  sold  at  a  cent  a  pound 
advance,  taking  the  notes  of  the  purchasers  for  the 
same  time.  These  second  purchasers  sold  at  an  addi- 
tional advance  of  a  cent  a  pound,  for  notes  at  six 
months.  The  first  set  of  notes  have  not  yet  matured, 
60  that  there  is  now  afloat  nearly  half  a  million  of 


DISCOUNTING  NOTES.  45 

paper  on  that  single  lot  of  sugar — to  say  nothing  of 
the  subsequent  sales,  of  which  we  are  ignorant.  I  do 
not  state  these  facts  to  prejudice  the  account  of 
Young,  Sterling  &  Co.,  but  on  general  grounds  of 
caution.  Before  passing  their  oftering,  I  want  the 
unanimous  approval  of  the  Board." 

Mr.  Button  wood  wants  to  know  if  the  bank  has  any 
of  the  paper  of  "  our  old  friend  Dennis,  in  Keade 
street  ?" 

The  Cashier  answers  in  the  negative. 

"  Because,"  resumes  Mr.  Buttonwood,  "  I  suspect 
he  had  something  to  do  with  the  last  purchase  of  that 
sugar.  He  has  lost  a  hundred  thousand  dollars  in 
his  business  within  the  last  year,  and  his  credit  is  now 
at  a  pretty  low  notch." 

"  What  do  you  say,  gentlemen  ?  Bring  the  matter 
to  a  close.  Shall  the  paper  of  Young,  Sterling  &  Co. 
be  passed  ?" 

The  directors  respond  unanimously,  "  Aye ;"  and  it 
is  marked  to  be  discounted. 

The  Cashier  announces  that  all  the  notes  offered 
have  been  discounted,  and  that  there  is  no  further 
business. 

"  Move  we  adjourn." 

Before  the  President  can  put  the  question  to  vote. 
Director  Breckenridge  requests  the  Board  to  "  hold 
on  a  minute."  He  has  "  a  little  lot  of  coffee  to  pay 
for,  and  wants  some  paper  discounted  to  the  extent 
of  six  or  eight  thousand  dollars."  Two  or  three 
voices  say :  "  Send  it  to  the  President."  Two  or  three 
more  repeat :  "  Move  we  adjourn ;"  and  all  second  the 


46  PKESIBENT  AND  BOAUD  OF  DIKECT0R8. 

motion  by  a  general  pushing  back  of  chairs,  and  put- 
ting on  of  hats.  Mr.  Breckenridge  understands  his 
paper  to  be  discounted,  and  informs  the  President 
that  he  will  send  it  to  the  bank  as  soon  as  he  goes  to 
his  office.  Half  the  members  are  already  out  of  the 
door,  pairing  off  together  to  consult  on  their  indivi- 
dual speculations,  and  to  forget  that  the  bank  is  in 
existence  until  the  next  discount  day  comes  round- 
It  is  as  likely  as  not,  that  the  President  and  Cashier 
may  congratulate  each  other  that  they  are  happily 
out  of  the  way. 

Mr.  Miller  having  disappeared  for  several  minutes 
in  company  with  others,  now  returns  alone : 

"  Mr.  President,  havn't  I  a  note  with  collaterals 
coming  due  to  day — ten  thousand  dollars  ?" 

"  Yes.  You  didn't  offer  at  the  Board,  and  I  ex- 
pected of  course  you  intended  to  pay  it." 

"  Pay  it,  indeed  !  "  says  Director  Miller.  "  Here. 
Let's  look  at  it?" 

The  two  go  inside  of  the  counter  to  the  teller's  desk. 
The  President  gets  the  note,  looks  over  the  collaterals, 
and  finds  them  to  consist  of  about  twenty  business 
notes,  the  drawers  of  which  live  any  where  between 
Halifax  and  the  Gulf  of  Mexico,  not  one  of  which  he 
can  know  anything  about,  and  the  half  of  which  are 
payable  at  Mr.  Miller's  store. 

"  When  are  these  coming  due  ?"  he  asks. 

"  E"ot  this  six  months,"  answers  Director  Miller. 
"  But  they're  all  as  good  as  wheat.  Pll  tell  you  what 
ril  do.  ril  make  a  new  note  at  ninety  days.  Just 
pass  it  to  my  credit,  and  I'll  send  a  check  to  take  up 
the  old  one." 


ME.    MILLEE   PAYS   HIS   NOTE.  47 

"  Go  ahead,"  says  the  President. 

The  times  are  easy.  He  knows  Mr.  Miller  to  be  a 
responsible  man,  or  thinks  he  knows  it,  and  marks  the 
note  for  discount.  His  slackness  of  authority  and  his 
sense  of  strict  propriety  are  at  variance.  The  result 
is,  a  weak  protest  or  expostulation,  which  does  not 
even  "  lock  the  door  after  the  steed  is  stolen." 

"  This  is  all  right  Mr.  Miller,  I  dare  say ;  but  I'd 
rather  you'd  offer  these  matters  regularly  at  the  Board 
meetings.  You  know  how  I'd  be  censured,  if  they 
should  turn  out  wrong  ?  I'm  entirely  willing  to  pass 
such  things  occasionally  for  you  or  any  other  director. 
We  understand  each  other — but  there's  Buttonwood  I 
He  don't  come  to  the  Board  often ;  but  when  he  does, 
you  see  how  he  pitches  in  ?  And  there's  old 
Crotchitt,  the  biggest  stockholder  in  the  concern.  He 
shuffles  in  at  odd  times,  and  will  have  the  discount 
register  carried  into  the  private  room ;  and  there  he 
reads  it  as  regularly  as  the  newspaper.  It's  well 
enough  not  to  give  these  fellows  a  chance  to  find  too 
much  fault  ?     Don't  you  think  so  ?" 

"  Oh  yes,  I  imderstand  all  that !  It's  a  good  rule, 
if  it  was  only  generally  observed.  I'll  try  and 
remember  it  next  time." 

The  next  time,  Mr.  Miller  remembers  it  in  the  same 
way.  Or,  instead  of  coming  back  after  the  adjourn- 
ment of  the  directors,  he  steps  in  before  the  hour,  and 
has  the  transaction  accomplished  in  advance. 

This  irregular  and  careless  manner  of  discounting 
bills  for  directors  has  not  unfrequently  led  to  the 
most  serious  results.  Tacit  consent  to  the  practice 
might  easily  gi-ow  up  from  the  direct  personal  confi- 


4:8  PKESmENT  AND  BOAED  OF  DIEEOTOES. 

dence  established  between  tliem,  which  makes  it  diflB- 
cult  to  express  dissent  witliout  indicating  censure.  It 
was  also  found  more  agreeable  to  obtain  their  accom- 
modations privately,  than  to  submit  their  offerings  in 
open  session  of  the  Board,  where  they  would  be 
competed  with  by  the  claims  of  dealers  generally. 
The  practice  led  to  anticipating  the  means  of  the 
bank  as  these  were  liberated  by  maturing  invest- 
ments ;  so  that,  in  a  stringent  market,  there  was  often 
but  little  left  to  divide  among  the  dealers  on  regular 
discount  days.  This  undue  absorption  of  bank  facili- 
ties by  a  few  privileged  persons  became  matter  of 
common  complaint ;  and  it  was  not  difficult  to  induce 
the  State  Legislature  to  require  a  specification,  in  the 
quarterly  returns,  of  "  all  sums  due  by  the  directors 
of  each  bank,"  separately  from  the  entire  amount  of 
loans.  The  abuse  has  been  measurably  checked  by 
this  statement,  though  there  are  various  methods  by 
which  the  law  may  be  evaded. 

The  authority  of  the  President  is  entirely  competent 
to  correct  this  abuse ;  but  it  may  be  as  much  of  a 
convenience  to  him,  as  to  any  of  the  directors.  His 
private  speculations  would  be  narrowed,  if  he  could 
not  get  ten  or  twenty  thousand  dollars  without  sub- 
mitting his  wants  at  a  regular  session  of  the  Board. 

Mr.  King  is  another  sort  of  president.  He  is  a  stem 
disciplinarian ;  never  borrows  a  cent  of  the  bank ; 
thinks  borrowing  discreditable  in  a  bank  officer.  It 
is  a  stretch  of  propriety,  in  his  opinion,  for  a  director 
to  borrow  from  his  own  institution ;  but  usage  toler- 
ates it.  The  by-laws  of  the  bank  require  the  direc- 
tors to  meet  twice  a  week,  to  discount  the  paper 


A   STKICT   CONSTKUCTIONIST.  49 

offered  by  its  dealers.  That  is  the  time  and  place  to 
lend  the  funds.  The  dealers  send  iu  their  offerings 
on  the  stated  days,  with  the  understanding  that  they 
are  to  share  equitably  in  the  facilities  of  the  bank  ; 
and  it  is  unjust  to  them  to  dispense  those  facilities  at 
irregular  times.  Moreover,  this  is  a  fruitful  source  of 
bank  losses.  If  all  the  paper  is  investigated  at  the 
Board  sessions,  we  shall  probably  discover  any  that 
is  weak.  He  positively  declines  to  exercise  the  dis- 
cretion of  discounting  notes  without  the  concurrence 
of  the  directors.  He  will  not  have  his  mind  burthened 
with  such  a  responsibility.  That  must  be  borne  by 
the  directors.  If  they  can  get  their  paper  discounted 
by  the  officers  in  the  recess  of  the  Board,  they  absent 
themselves  from  its  meetings,  and  gradually  come  to 
consider  the  bank  as  a  mere  personal  convenience  to 
themselves,  forgetting  that  they  owe  any  duties  to  the 
stockholders,  and  to  the  general  commercial  interest. 

The  habits  of  private  life  are  often  freely  scanned 
at  the  Bank  Board. 

"  Yes  !  Mr.  Black  is  clever  and  smart.  He  has 
capital,  too.  But  he  had  no  business  to  buy  a  house 
on  Fifth  Avenue  at  sixty  thousand  dollars,  and  spend 
forty  more  to  furnish  it.  There's  a  hundred  thousand 
dollars  gone  clean  out  of  his  business  ;  and  what's  the 
consequence  ?  Why,  he  comes  here  and  wants  to  run 
a  discount  line  right  along  for  the  whole  amount! 
Gentlemen,  banks  were  not  got  up  to  enable  a  few 
people  to  live  like  lords,  while  the  rest  of  the  world 
are  sweating  to  keep  body  and  soul  together !  It's 
just  as  sure  to  come  to  an  end,  as  a  man's  notes  are  to 
come  due." 

3 


60  PKESIDENT   AND   BOARD   OF   DIKECT0E8. 

"  Tliat  may  be,  Mr.  Fairfax ;  but  let  me  tell  you 
that  Black  is  rich  beyond  a  contingency.  He  owns 
half  the  upper  end  of  Brooklyn,  and  the  city's  stretch- 
ing out  in  that  direction  like  a  young  race-horse. 
Why,  in  the  course  of  another  year.  Black  will  have 
a  Fifth  Avenue  there,  all  to  himself.  I  wish  I  had 
only  the  quarter  of  that  piece  of  property,  and  you 
wouldn't  catch  me  dickering  diy-goods." 

"  "Well — I'd  rather  see  the  tenth  part  of  it  realized, 
than  hear  what  it's  going  to  bring  a  year  hence.  Mr. 
Black  may  be  in  his  grave  before  the  month's  out,  for 
what  I  know  ;  and  what  then  ?  How  are  his  notes  to 
be  paid  ?  If  his  estate's  worth  five  millions,  the  bank 
would  have  to  wait,  perhaps,  as  many  years.  Mr. 
President,  my  notion  is,  that  we  have  no  right  to  dis- 
count any  thing  at  this  Board  but  a  honafide  com- 
mercial note  that  will  be  paid  when  due.  And  on 
top  of  that,  the  indorser  must  be  able  to  take  it  up 
himself,  if  the  drawer  should  fail  or  die.  Don't  you 
see  that  we  are  discounting  this  paper  to  pay  for  Mr. 
Black's  house  and  furniture,  just  for  his  single  enjoy- 
ment ?  This  isn't  commercial  paper,  sir !  It's  accom- 
modation paper,  in  the  true  sense.  Mr.  Black  has 
invested  his  commercial  means  in  a  house  and  fur- 
niture ;  and  now  he  wants  us  to  ride  him  through ! 
!No,  sir ;  I'll  never  give  my  voice  to  any  such  thing 
while  I'm  a  member  of  this  Board.  Besides  that, 
such  an  establishment  necessitates  enormous  expenses 
of  living.  There's  to  be  two  or  three  grand  parties 
and  balls  every  year.  And  a  carriage,  and  a  foot- 
man, and  one  of  these  fellows  with  breeches  and  white 
stockings,  to  scrape  and  bow  at  the  door,  and  not 


EXTRAVAGANT   LIVING.  61 

less  than  a  dozen  servants,  to  keep  the  great  house  up. 
Mr.  President,  when  you  add  Stewart's  bill  for  silks, 
and  "W"eller's  bill  for  ice-creams,  and  all  that  French- 
ified sugar- work,  with  the  foreign  wines  and  hot-house 
grapes,  I  can  only  say  that  it  is  fearful !  IsTo  business 
in  the  world  can  support  it,  sir." 

Mr.  Joseph  Exeter  speaks  only  on  extraordinary 
occasions. 

"There  are  certain  principles,  Mr.  President,  on 
which  sound  trade  is  built  up ;  and  one  of  them  is 
economy.  I  agree  with  my  friend,  Mr.  Fairfax,  in 
what  he  has  said  about  carrying  a  heavy  discount 
line  for  the  personal  accommodation  of  Mr.  Black. 
That  is  not  commerce,  sir.  It  is  personal  expendi- 
ture, personal  extravagance,  personal  luxury,  and,  in 
the  end,  pereonal  ruin.  I  don't  want  to  see  this 
institution  involved  when  the  end  comes." 

Mr.  Exeter  points  out  the  bad  influence  of  such 
examples  on  young  men  who  are  beginning  business, 
and  concludes  by  a  strong  protest  against  Mr.  Black's 
ofl'ering.  He  is  most  likely  to  be  set  down  as  "  behind 
the  age."  He  is  unequal  to  the  emergencies  of 
modern  enterprise ! 

The  President  listens  deferentially  to  the  discussion 
of  the  directors.  Mr.  Black  is  probably  known  to 
him  as  a  bold  and  "  lucky"  operator  in  whatever 
chances  the  market  may  present — to-day  in  real 
estate,  to-morrow  in  steamships,  and  next  day  in  a 
guano  expedition,  or  a  government  contract.  He  has 
important  connections  in  trade,  and  his  name  may  be 
seen  in  half  a  dozen  insurance,  railroad,  and  mining 
companies.       It   is    not  so  easy  to  reject  entirely 


52  PKESIDENT   AND   BOAKD   OF   DERECTOKS. 

the  offering  of  such  a  man.    He  must  be  concili- 
ated. 

"  Gentlemen,  if  you  will  refer  Mr.  Black's  offering 
to  me,  I  will  endeavor  to  put  him  off  with  as  little  as 
possible.  It  will  be  to  the  interest  of  the  bank  to  do 
something  for  him." 

It  is  so  referred ;  and  that  gentleman  is  satisfied 
with  the  one-half  or  one-third  of  the  amount  which  he 
asks  for. 

The  duties  of  the  President,  in  personal  intercourse 
with  dealers,  are  regarded  as  limited  to  the  treatment 
of  credit  from  a  strictly  commercial  point  of  view. 
He  takes  no  direct  cognizance  of  their  moral  habits — 
though  these,  in  fact,  often  turn  the  scale  against  an 
account. 

Mr.  Craff't  has  been  a  customer  in  good  standing 
with  the  bank.  He  has  kept  an  average  balance  of 
six  or  eight  thousand  dollars,  and  obtained  a  discount 
line  of  twenty  thousand — one  of  the  most  satisfactory 
class  of  accounts. 

It  is  whispered  one  day,  that  Mr.  Crafft  is  a  gam- 
bler, and  his  offering  is  rejected.  His  credit  sinks, 
and  in  the  course  of  a  few  months,  his  line  of  dis- 
count is  reduced  more  than  one-half.  The  paper  that 
he  offers  is  the  same  that  has  heretofore  been  esteemed 
satisfactory  by  the  bank ;  but  it  is  frequently  refused. 
Personal  solicitation  of  the  President  is  equally  unsuc- 
cessful. 

Mr.  Brewer  drinks  brandy  to  excess.  As  with  Mr. 
Crafft,  his  accommodations  are  gradually  reduced.  He 
keeps  up  his  balance  of  deposits  with  more  than  com- 
mon assiduity,  to  strengthen  his  claim.    Note  after 


BAD  HABITS.  63 

note  of  his  discount  line  is  paid  off,  and  he  seldom 
obtains  "  a  favor."  In  endeavoring  to  maintain  his 
affairs  with  the  bank,  he  frequently  comes  in  contact 
with  the  President. 

"  Ko,  sir.     We  cannot  do  it.     I  am  very  sorry." 

"But,  Mr.  President,  my  line  is  reduced  from 
twenty  thousand  dollars  down  to  live.  My  balances 
are  even  better  than  ever,  and  I  offer  you  unexcep- 
tionable paper,  that  is  always  paid  at  maturity." 

"  I  am  aware  of  that,  sir  ;  but  it  is  out  of  our  power 
to  discount  for  you  at  present.  We  are  obliged  to 
decline  a  large  proportion  of  our  offerings." 

"  Will  you  discount  for  me  next  week  ?" 

"  Can't  tell,  sir.  K  you  offer  at  the  Board,  and 
your  paper  is  satisfactory,  it  may  be  done." 

This  is  an  example  of  the  common  dissimulation 
practiced  by  bank  officers  to  get  rid  of  undesirable 
customers.     How  much  better  would  it  be  : 

"Your  paper  is  rejected,  Mr.  Brewer,  because  you 
are  destroying  yourself  by  habits  of  intoxication.  You 
are  on  the  highroad  to  insolvency.  Your  account 
entitles  you  to  liberal  accommodation,  and  it  would 
give  us  pleasure  to  render  it.  But  your  credit  is 
rapidly  on  the  decline,  and  will  soon  be  gone  alto- 
gether. Every  bank  in  the  city  will  hasten  to  get 
your  name  off  its  books  before  it  becomes  positively 
imsafe." 

Such  a  warning  would  be  more  authoritative  from 
a  bank  president  than  from  any  other  person.  It 
might  be  lost  on  the  man  who  has  gone  so  far  as  to 
be  already  discredited ;  but  the  example  would  not 
be  without  influence  on  those  who  are  following  at 


54:  TRESroENT  AND   BOAKD   OF   DIRECTOKS. 

some  distance  in  tlie  rear.  A  merchant  values  few 
things  so  much  as  his  good  name  in  the  market ;  and 
he  ought  to  know  that  every  bad  habit  which  affects 
his  character,  is  scored  down  opposite  to  it  in  the 
Eeference  Book  of  tlie  bank  officer.  If  Mr.  Crafft 
and  Mr.  Brewer  conld  have  seen  records  like  the  fol- 
lowing, they  would  have  hardly  thought  it  worth 
while  to  make  any  appeal  to  the  President  : 

"  Eichard  Crafft,  flour-merchant,  'No.  —  Pearl  street. 
Began  business  in  1840  with  $25,000  capital.  Manag- 
ing, economical,  and  conscientious.  V  ery  successful. 
Standing  good,  1842,  continues  to  prosper.  Built 
large  house  on  Madison  square,  cost  $30,000.  Said 
to  have  cleared  lifty  in  the  previous  two  years. 
Capital  now  $40,000,  besides  real  estate.  1843^4 
-45,  affairs  well  conducted,  credit  unquestioned, 
makes  money  fast.  1846  to  50,  worth  now  $150,000, 
besides  real  estate.  1851,  living  high,  and  takes 
'flyers' in  the  stock  market.  Caution.  1852,  credit 
still  good,  large  business,  but  has  been  seen  at  gamb- 
ling-houses. Keep  a  sharp  eye  on  him.  1853, 
operates  extensively  in  stocks.  Is  now  often  seen  at 
the  gambling-table.  June  1854,  Crafft  is  reported  to 
have  lost  $40,000  at  play,  and  in  Erie,  within  the 
last  six  months.  October  1854,  no  better.  Credit  on 
the  decline.  January  1855,  continues  in  a  bad  way. 
Think  it  advisable  to  reduce  his  account." 

"Esau  Brewer,  dry-goods  jobber,  Broadway.  Be- 
gan in  1846  with  capital  of  $40,000.  Up  to  1852, 
successful,  and  highly  esteemed.  Capital  at  later 
date  increased  to  $125,000.  April  1853,  bought 
country-seat.  Expensive  family,  but  enjoys  good 
credit.  Paper  to  his  own  order  sells  at  the  best  rates. 
1854,  is  getting  rather  free  with  brandy.  Business 
continues  thriving,  and  credit  unimpaired.     October 


WHAT   IS   A   PEESroENT   TO   DO  ?  55 

1855,  Brewer  called  in  to  press  for  discounts.  Looks 
like  a  confirmed  toper.  Running  down  hill  at  a 
gallop.  January  1856,  poor  Brewer  in  again — past 
saving." 

Information  comes  to  the  bank  officers  without  their 
seeking,  and  is  generally  brought  the  more  promptly 
in  proportion  to  its  evil  character.  Dealers  who  wish 
to  gain  favor  with  the  President,  whisper  rumors  in 
his  ear,  confidentially,  that  another  dealer  has  met 
with  serious  losses,  or  has  fallen  into  bad  company. 
Each  director  contributes  his  share  of  gossip ;  and  the 
"  Commercial  Agency"  is  bound  to  give  immediate 
notice  to  its  subscribers  of  whatever  may  affect  their 
interest. 

A  bank  president  may  be  regarded,  in  some  degree, 
as  a  sponsor  for  the  integrity  of  commerce.  He  is 
pei'petually  in  contact  with  the  mind  of  trade,  and 
why  should  he  not  instruct  it  ?  "Where,  if  not  by  him, 
shall  a  beginning  be  made  ?  Is  he  clothed  with  the 
greatest  power  in  society,  merely  to  put  a  motion,  or 
to  announce  a  vote  in  a  Board  of  Directors,  at  a  salary 
of  ten  thousand  dollars  a  year  ?  Are  his  hourly  op- 
portunities for  giving  wise  counsel  and  timely  remon- 
strance to  be  turned  off  by  a  trick  of  dissimulation  ? 

Another  question  might  be  asked : 

Are  our  Bank  Presidents  qualified  by  knowledge, 
cultivation,  and  general  weight  of  character,  to  exert 
a  good  influence  over  their  commercial  pupils  ? 

They  are  not  chosen  for  that  purpose.  The  posses- 
sion of  wealth,  and  the  power  to  control  deposits,  take 
precedence  of  all  questions  relating  to  conscience, 
intellectual  accomplishments,  and  financial  ability. 


56  PRESIDENT   AND   BOAKD   OF  DIEECTOKS. 

If  a  man  is  rich,  he  has  many  friends,  and  a  wide  per- 
sonal influence.  He  is  sought  after  to  liave  his  name 
enrolled  among  the  managers  of  various  imposing 
institutions.  He  is  a  patron  of  fashionable  charities. 
He  is  called  on  to  preside  at  public  meetings.  There- 
fore, he  is  a  very  proper  man  to  be  a  Bank  President ! 
It  is  not  supposed  that  these  distinctions  are  incon- 
sistent with  the  most  desirable  qualifications  for  the 
office ;  but  they  are  too  often  admitted  in  substitution 
thereof. 

There  is,  happily,  a  saving  clause  in  the  oi'ganization 
of  a  bank,  which  protects  it  against  many  of  the  con- 
sequences of  unfitness  in  the  chief  officer.  The  divi- 
sion of  labor  is  such  as  to  compensate  in  the  mere 
mechanism  of  the  business  for  want  of  capacity  in  the 
individual ;  and  the  Board  of  Directors  have  the  right 
to  assume,  either  in  session  or  by  committees,  the  con- 
duct of  important  affairs.  They  may  limit  the  discre- 
tionary powers  of  the  President  by  by-laws,  or  by 
closer  personal  attention  to  the  business. 

It  is  not  unfrequent  that  the  Cashier  of  a  bank, 
though  nominally  subordinate,  is  practically  the 
BUf)erior  officer.  His  duties  being  to  a  great  extent 
concurrent  with  those  of  the  President,  it  is  easy  for 
him  to  step  in  and  occupy  the  ground.  He  may  hold 
the  reins  of  authority,  and  be  the  ears,  the  eyes,  the 
brain  and  the  soul  of  the  institution.  Tlie  relation 
works  itself  into  such  terms  unavoidably,  when  the 
President  is  unequal  to  his  place. 

The  manual  work  that  is  performed  by  the  Presi- 
dent in  a  bank  of  the  first  class  is  but  little.  A 
casual  observer  might  think  his  salary  of  ten  thousand 


PEESONAL  INFLIJENCE   OF  THE   PKESIDENT.  57 

dollars  a  year,  out  of  all  just  proportion  with  it.  But 
his  freedom  from  the  annoyance  of  details  leaves  his 
judgment  cool,  and  enables  him  to  give  more  uninter- 
rupted attention  to  the  causes  which  affect  commercial 
credit,  and  which  may  make  it  expedient  to  change 
the  course  of  the  business. 

The  President  of  a  bank  is  its  personal  and  moral, 
as  well  as  its  legal  representative.  If  he  is  known  to 
be  high-minded  and  honorable  in  his  individual  rela- 
tions, the  confidence  of  the  community  does  not  stop 
at  the  man,  but  extends  to  the  institution.  Its  coun- 
ters are  thronged  by  depositors,  and  many  friends  are 
anxious  to  become  its  stockholders.  Such  a  person- 
ality is  of  prodigious  account  in  an  active  market, 
where  competition  divides  the  patronage  of  dealers. 
It  acts  beneficially  in  the  opposite  direction  also,  by 
repelling  hazardous  business.  In  banking,  as  well  as 
in  social  intercourse,  "  like  seeks  like."  The  President 
who  speculates  in  lands,  railroad  stocks,  and  mining 
shares,  attracts  around  him  the  plotters  in  these  vari- 
ous schemes ;  and  whatever  may  be  the  extent  of  his 
private  property,  however  high  his  standing  and  suc- 
cessful his  adventures,  the  capital  of  a  bank  is  not 
safe  in  his  hands.  At  one  time  or  another,  in  one 
way  or  another,  the  institution  is  compromised  by 
unsafe  investments.  The  solicitation  of  a  personal 
friend  obtains  a  short  loan  on  good  security ;  the 
market  changes,  and  the  security  depreciates  while 
the  loan  is  extended  from  necessity,  and  perhaps 
increased ;  a  substitution  of  securities  is  allowed ; 
defective  powers  of  attorney  creep  in  by  oversight ; 
the  treasurers  of  the  borrowing  companies  are  changed ; 
3* 


58  PRESroENT   AND   BOAED   OF  DIRECT0K8. 

the  original  negotiators  die; — a  thousand  accidents 
occur  to  involve  and  to  complicate  this  class  of 
financial  operations.  Tlie  only  rule  of  safety  for  a 
bank  is,  to  discard  them  altogether ;  and  this  is  the 
rule  of  integrity  to  the  commercial  interest  also. 

The  bank  officer  who  is  not  proof  against  the  tempt- 
ations held  out  for  the  employment  of  funds  in  spec- 
ulative channels  is  an  unsafe  trustee. 

"  "What !"  says  one,  "  shall  I  keep  idle  two  or  three 
hundred  thousand  dollars,  which  the  regular  dealers 
of  the  bank  do  not  want  to  borrow,  when  I  can  loan 
it,  on  call,  at  seven  per  cent  interest  ?"  Accordingly, 
he  loans  it  out.  This  is  the  origin  of  the  employment 
of  bank  capital  on  the  Stock  Exchange — a  practice 
which  has  often  been  severely  criticized  by  com- 
mercial men. 

The  desire  to  make  the  most  out  of  the  means  of 
the  bank  is  natural ;  but  this  does  not  always  con- 
sist in  a  particular  economy,  such  as  transient  loans 
outside  of  the  commercial  interest.  It  may  be  better 
economy  to  let  the  excess  remain  as  a  dead  weight, 
until  the  renewed  activity  of  trade  shall  again  call  it 
into  use.  Such,  in  fact,  has  been  the  experience  of 
several  of  our  city  banks  which  have  repudiated  stock 
loans  altogether.  They  have  found  their  reward  in 
attracting  the  best  class  of  merchants  to  their  coun- 
ters, which  gives  a  more  stable  deposit,  and  conse- 
quently a  more  uniform  line  of  discount. 

The  objections  to  call-loans  on  the  Stock  Exchange 
are : — that  they  inflate  and  sustain  fictitious  values ; 
that  they  encourage  the  speculative  market,  and 
stimulate  the  rates  of  interest,  which  commerce  has 


CALL-LOANS   TO   THE   STOCK   MARKET.  59 

to  pay ;  that  many  of  the  securities  bought  and  sold 
are  worthless,  and  to  countenance  dealing  in  them, 
therefore,  tends  to  fraud ;  that  the  system,  to  a  great 
extent,  is  mere,  gambling,  in  which  merchants  are 
constantly  tempted  to  their  ruin  ;  and  that  it  corrupts 
the  whole  market. 

It  is  well  known  that  the  old  commission-house  of 
Tumbledown  &  Co.  was  for  many  years  a  measure  of 
credit.  "  Will  you  take  some  paper  to-day  ?"  asks  a 
broker  of  a  Bank  President. 

"  Yes.  We'll  take  fifty  thousand  dollars,  if  it's  as 
good  as  Tumbledown  &  Co." 

The  same  President  was  shocked  one  day  to  hear 
that  the  house  had  been  ruined  by  speculations  in 
"  Erie,"  or  "  Harlem ;"  and  the  probabilities  were 
as  four  to  five,  that  his  own  loans  to  the  stock-market 
had  something  to  do  with  it. 

In  some  banks,  stock  loans  have  been  prohibited  by 
a  vote  of  the  Board  of  Directors.  Where  they  are 
admitted,  the  President  commonly  exercises  his  dis- 
cretion as  to  the  kind  and  amount  of  securities.  There 
is  probably  not  a  Bank  Board  in  the  City  of  ISTew 
York  that  would  not  pass  a  vote  of  prohibition,  if 
strongly  urged  to  do  so  by  the  President. 

Among  the  duties  of  the  President  is,  that  of  con- 
stantly reviewing  the  credits  of  the  bank. 

Merchandise  is  sold  from  first  hands  to  the  johher 
on  a  credit  of  eight  months  (more  or  less),  for  which 
the  latter  gives  his  promissory  notes.  The  jobber 
sells  in  smaller  quantities  (by  the  piece  or  single 
package)  to  the  retailer,  on  a  credit  of  six  months.     It 


CO  PRESIDENT  AND   BOARD   OF  DIRECTORS. 

is  good  management  for  a  merchant  to  have  his  bills 
receivable  coming  clue  in  season  to  apply  their  pro- 
ceeds to  discharge  his  bills  payable.  But  the  ability 
of  the  retailer  to  pay  the  jobber  depends  chiefly  on 
the  punctuality  of  the  consumer  in  settling  his  bills. 
Thus  each  class  of  merchants  is  dependent  on  another 
class  for  the  means  of  liquidation.  A  large  cash 
caj)ital  may  enable  a  man  to  pay  all  his  notes  at 
maturity,  even  if  his  debtors  fall  considerably  in 
arrears ;  but  the  majority  of  traders  of  all  classes  are 
obliged  to  carry  full  lines  of  credit.  This  system 
supplies  our  banks  with  promissory  notes,  the  discount 
of  which  is  their  principal  source  of  profit. 

The  New  York  city  banks  do  not  discount  paper 
nntil  it  comes  within  two  or  three  months  of  maturity. 
That  which  has  a  longer  period  to  run,  is  therefore 
unavailable  for  direct  use.  The  bank,  however,  will 
admit  a  modification  of  its  rules,  when  satisfied  that 
the  notes  are  good.  It  will  receive  a  certain  amount 
of  them  as  collateral  security  for  the  merchant's  note 
payable  within  the  required  time,  reserving  in  such 
cases  what  is  called  a  onargin  for  contingent  losses. 
Thus  a  dealer  may  deposit  twelve  thousand  dollars 
of  paper,  which  has  from  four  to  eight  months  to  run, 
coupling  with  it  his  own  note  for  six  or  eight  thousand 
dollars  at  sixty  days.  The  excess  is  the  margin 
intended  to  cover  loss  by  the  possible  failure  of  some 
of  the  drawers,  and  the  expenses  of  collection  and 
interest  that  would  accrue,  if  the  dealer  himself  should 
fail  and  oblige  the  bank  to  have  recourse  to  the  col- 
lateral notes.  This  is  a  very  simple  operation  in 
appearance ;  but  it  involves  the  exercise  of  no  com- 


"Sit  down,  bir,  and  let  nie  look  at  your  collateral  notes." 


DISCOTINTrN'G   NOTES   WITH  COLLATEKAL   gECUEITY.       61 

mon  sagacity  and  discretion  on  the  part  of  the  bank 
oflScers.  They  must  endeavor  to  maintain  an  accurate 
knowledge  of  the  affairs  of  the  merchant  to  whom 
the  loan  is  made,  and  of  the  responsibility  of  the 
drawers  of  the  collateral  notes.  The  latter  are  resi- 
dent in  small  towns  and  at  trading  stations  all  over 
the  country,  from  Canada  to  Mexico.  It  is  impossible 
for  a  bank  officer  to  get  much  specific  information 
about  them.  It  is  presumed  that  the  city  merchant 
has  sufficient  knowledge  of  his  customers  to  justify 
the  credit  that  he  gives  them.  But  the  President  or 
Cashier  frequently  enters  into  a  particular  examina- 
tion of  each  note. 

"  Mr.  Jobber,  the  Board  of  Directors  has  referred 
your  offering  to  me,  to  ascertain  something  about 
these  collaterals.  Sit  down,  sir,  and  let  us  look  over 
them.  Here  is  Joseph  Scott,  of  Wheeling,  four  hun- 
dred and  sixty  dollars,  seven  months  to  run.  "What 
do  you  know  about  him  ?" 

"  Well,  Mr.  President,  Scott  has  dealt  with  me  five 
years,  and  never  failed  to  pay  promptly.  He  repre- 
sents himself  as  an  owner  of  real  estate,  worth  ten 
thousand  dollars..  Besides  that,  his  stock  averages 
some  twenty  thousand  over  all  his  debts.  I  have  a 
correspondent  there  who  confirms  his  statement,  and 
the  Mercantile  Agency  here  says  the  same  thing. 
Scott's  general  character  is  very  fair.  Church  mem- 
ber— very  gentlemanly.  I  sell  him  about  three  thou- 
sand dollars  a  year,  and  he  owes  me,  running,  say 
two." 

"  That's  quite  satisfactory,    l^ow  here's  Zach  &  Co., 


62  PRESIDENT  AIST>  BOAKD   OF   DIRECTORS. 

Chicago,  who  are  they  2  Nine  hundred  and  fifty 
dollars,  six  months." 

"  Zach  &  Co.  were  recommended  to  me  by  my 
brother-in-law,  who  lives  close  by  one  of  the  firm,  a 
little  out  of  the  city.  Owns  a  fine  country-seat — 
made  forty  thousand  dollars  by  the  rise  of  real  estate 
— one  of  the  early  settlers — half  owner  of  a  hotel — 
worth  altogether  not  a  cent  less  than  a  hundred  thou- 
sand dollars.  We  trust  him  from  three  to  five,  but 
he  pays  cash  half  the  time." 

"  Yery  good.  ISText  comes  Stubbs  &  Brother,  of 
Shreveport,  Louisiana,  twelve  hundi-ed  dollars.  That's 
a  good  way  off!" 

"Yes,  sir,  but  very  responsible  men.  They  have 
a  capital  of  thirty  thousand  dollars.  Their  city  refer- 
ences ai'e  of  the  first  class,  and  we  have  made  parti- 
cular inquiry  as  to  their  general  habits  and  capacity 
for  business.    This  is  their  first  purchase  of  us." 

"  Here  are  two  notes  —  Jackson  &  Smith  of 
Montgomery,  Alabama,  and  Joseph  Tompkins  of 
Galveston,  Texas,  made  payable  at  your  office,  Mr. 
Jobber.  We  shall  decline  them,  as  notes  drawn  in 
that  way  are  apt  to  be  protested." 

"  Those  people  have  always  remitted  promptly,  Mr. 
President.  The  reason  of  making  their  notes  payable 
in  New  York  is,  that  they  ship  cotton  to  the  East 
and  draw  against  it." 

"  That  may  be ;  but  we  prefer  notes  that  are  pay- 
able where  the  parties  reside.  You  must  send  us 
others  in  their  place." 

"  "We  can  do  so,  sir,  if  you  prefer  it." 

"  Ezra  Cooper,  Savanifah.    Who's  he  ?" 


DISCOUNTING   NOTES  WITH  COLLATERAL   SECUKITY.       63 

"First-rate  man.  Owns  a  plantation  with  two 
hundred  slaves.  Customer  of  ten  years'  stand- 
ing." 

The  list  of  collateral  notes  is  thus  scrutinized  by 
the  President  or  Cashier.  The  extensive  correspond- 
ence of  the  bank  enables  the  officers  often  to  cor- 
roborate or  to  correct  the  representations  of  the  dealer. 
It  has  collected  paper  of  the  same  drawers,  or  had  it 
returned  protested.  A  short  inquiry  is  frequently 
appended  at  the  foot  of  a  letter  to  a  Cashier  in  Co- 
lumbus or  elsewhere  :  "  How  does  Geo.  Draper  of 
(or  near)  your  city  stand?"  The  answer  would  gener- 
ally be  esteemed  as  more  worthy  of  reliance  than  the 
account  of  a  dealer  who  is  an  interested  party. — 
"  George  Draper,  in  the  dry-goods  business,  is  suc- 
cessor to  his  former  employers  who  failed  a  year 
back.  Has  the  good-will  of  the  old  store,  stock  twenty 
thousand  dollars,  no  paper  out  in  these  parts,  prompt 
in  his  dealings,  and  is  careful  how  he  trusts  peo- 
ple, I  should  say — a  man  of  the  upper  middling 
class." 

Another  sort  of  answer  will  sometimes  come : 
"  George  Draper  is  just  now  out  on  a  grand  spree. 
He  is  a  good  whole-souled  fellow  with  but  one  enemy 
in  this  world,  and  he  is  George  Draper.  Has  real 
estate,  well  mortgaged,  a  fine  run  of  customers  who 
never  pay  till  called  upon — and  George  is  not  the 
man  to  call.  Family  of  five  children,  two  grown-up 
and  expensive  daughters,  and  a  son  who  is  the  best 
sportsman  in  these  diggings. — Confidential.  Yours 
truly." 

The  President  wants  to  verify  a  statement  of  the 


64:  PKESroENT   AND  BOAKD   OF   DIRECTORS. 

affairs  of  Jonas  Marks  of  Toronto,  whose  note  for 
twelve  hundred  dollars,  at  seven  months,  is  among 
Mr,  Jobber's  collaterals.  He  sends  an  inquiry  to  the 
"  Commercial  Agency"  of  Messrs.  Paul  &  Pry,  and 
in  thii'ty  minutes  gets  the  following  answer : 

"  [confidential.] 

"  Jonas  Marks,  Toronto,  TJ.  C,  general  hardware. 
Began  business,  in  1S49,  with  cash  capital,  $10,000. 
ISTot  very  successful  for  the  first  two  years — rather 
fond  of  frolics — credit  at  home  not  good.  In  1852, 
got  run  over  by  a  railway-car,  and  lost  half  a  leg. 
Recovered  $5,000  damages.  Settled  down  and 
begun  to  thrive  immediately.  In  1853,  married  a 
daughter  of  one  of  our  wealthiest  citizens  who  has 
since  died,  leaving  an  estate  of  three  hundred  thou- 
sand dollars  to  be  divided  among  twelve  children. 
M.  is  one  of  the  executors.  His  business  has  much 
improved  since  '52.  In  '55,  he  realized  a  handsome 
sum  by  selling  off  some  real  estate,  and  was  appointed 
deacon  in  the  church.     Credit  is  now  A  1." 

The  ledgers  of  Messrs.  Paul  &  Pry  are  full  of  these 
particulars.  Family,  social  connections  and  habits, 
are  often  traced  with  great  minuteness.  Nothing 
that  bears  on  credit  is  unimportant ;  and  there  are 
few  facts  of  any  consequence  relating  to  it  that 
escape  tlie  record.  K  Mr.  John  Green  of  Galveston, 
Texas,  wants  to  buy  goods  in  the  New  York  market 
for  his  notes,  he  must  take  care  how  he  keeps  fast 
horses  and  runs  into  extravagant  expenses. 

The  time  of  most  excitement  and  difficulty  to  the 
President,  is  in  an  extreme  financial  pressure.  If  he 
is  then  himself  free  from  debt,  as  he  should  be,  he 


CLAIMS   OF  DIRECTORS.  65 

becomes  practically  a  dictator.  The  directors,  who 
are  quite  likely  to  want  money  as  badly  as  other  peo- 
ple, are  often  themselves  suppliants ;  and  from  that 
moment,  their  influence  at  the  Board  declines.  They 
are  subject  to  the  President,  because  they  are  depend- 
ent on  his  will  for  loans ;  and  his  will,  being  gov- 
erned by  a  strong  sense  of  justice  and  impartiality, 
is  in  opposition  to  their  desires.  Single-handed,  he 
can  resist  the  whole  twelve  if  they  should  combine 
against  him  to  absorb  an  undue  proportion  of  the 
funds. 

A  director  has  a  plausible  argument  in  his  favor 
when  he  urges  his  claim  for  larger  loans.  He  gives 
valuable  time  to  the  bank,  and  is  expected  to  uphold 
it  in  emergencies ;  therefore,  he  is  entitled  to  pre- 
cedence before  dealers  generally  when  he  is  himself 
in  an  emergency.  Besides,  if  a  director  should  be 
allowed  to  fail,  the  rumor  gets  abroad  and  will  be 
believed,  that  he  is  largely  indebted  to  the  bank,  and 
thus  the  bank  will  be  more  crippled  than  it  would  be 
by  sustaining  him  with  additional  loans.  Against 
these  arguments  the  President  opposes  his  resolute 
negative. 

"  You  have  as  much  money  out  of  the  bank  as  you 
are  entitled  to,  and  I  will  not  consent  to  discount  for 
you  another  dollar.  If  you  fail,  I  can't  help  it ;  and 
if  the  bank  suff'er  in  public  estimation  as  a  conse- 
quence, the  fault  will  be  yours  and  not  mine." 

This  is  the  language  of  a  President  whose  experi- 
ence warns  him  that  it  is  easier  to  refuse  at  the  right 
stage  of  such  a  case  than  at  the  wrong  one  ;  and  that 
a  bank  always  sustains  more  injury  by  an  officer's 


66  PBESIDENT  AND   BOAED   OF   DIRECTOKS. 

departure  from  sound  rules  of  management  than  from 
the  misfortunes  of  an  individual  director.  If  the 
President  is  publicly  known  as  a  man  who  will  not 
deviate  from  an  impartial  and  upright  course,  even 
to  serve  a  personal  friend  in  great  extremity,  his 
institution  cannot  be  hurt  by  false  rumors. 

On  the  other  hand,  a  yielding  President,  or  one 
who  is  himself  a  borrower  and  embarrassed  for  the 
want  of  funds,  can  exert  no  authority  over  a  needy 
Board  of  Directors.  There  is  no  restraint  upon  the 
latter.  "  Common  want  makes  mutual  friends."  The 
convenience  of  dealers  generally  is  disregarded,  and 
the  funds  are  absorbed  by  a  few.  If  the  institution 
escapes  immediate  difficulty  and  discredit,  it  does  not 
escape  ultimate  damage  by  the  loss  of  the  best  class 
of  dealers,  who  transfer  their  accounts  to  other  banks 
where  a  more  honorable  spirit  prevails. 

The  directors  of  a  bank  are  frequently  solicited  by 
their  friends  and  persons  in  trade  to  "  speak  a  good 
word  for  them  at  the  Board."  It  is  flattering  to  their 
self-importance  to  be  called  on,  as  they  often  are,  by 
men  who  are  vastly  their  superiors  in  social  standing, 
education  and  manners,  and  to  be  begged  for  "  their 
influence."  It  gratifies  them  to  prove  that  if  an 
acquaintance  may  be  considered  an  honor  on  one  side, 
it  may  be  of  substantial  service  on  the  other.  But 
this  personal  solicitation  becomes  annoying  to  them 
in  a  tight  market.  They  shift  the  ungraciousness  of 
a  direct  refusal  on  the  officers. 

"  I'll  do  what  I  can  for  you,  but  you  had  better  go 
to  the  President." 

The  President  then  runs  the  gauntlet  of  incessant 


A  PANIC  DAY.  67 

importunitj.  He  appears  to  be  a  monster  of  insen- 
sibility. Manj  who  approach  him  on  the  faith  of 
long  and  intimate  friendship,  go  away  convinced  that 
all  his  professions  of  regard  have  been  false,  and  that 
he  is  "  a  hypocrite."  He  is  charged  with  sei'ving  his 
favorites,  or  using  the  bank  funds  to  promote  his  own 
speculations 

It  is  now  fifteen  minutes  before  three  o'clock  on  a 
panic  day. 

Mr.  Moreton  is  one  of  the  oldest  dealers  of  the 
bank,  and  a  large  stockholder.  He  has  already  ap- 
pealed to  the  President,  between  whom  and  himself 
exists  a  strong  personal  friendship,  and  he  now  returns 
for  a  last  effort  before  the  dreadful  stroke  of  three. 

"  I  am  sorry  to  see  you  again,  sii'." 

"  You  may  be  assured  that  the  last  extremity  only 
has  brought  me  back.  Mr.  President,  if  I  do  not  get 
ten  thousand  dollars  to-day,  I  shall  go  to  protest  and 
the  labor  of  my  whole  life  is  lost.  Here  are  my 
securities,  worth  three  times  the  amount !" 

"  My  dear  sir,  I  am  powerless  both  officially  and 
personally.  The  bank  is  on  the  verge  of  discredit. 
I  have  no  right  to  endanger  the  interests  of  our  stock- 
holders by  loaning  another  dollar.  Tour  case  is  but 
one  of  twenty  similar,  that  have  been  presented  with- 
in the  last  hour,  and  it  has  been  my  painful  duty  to 
reject  all." 

The  President  is  truly  in  most  trying  circumstances. 
His  relations  with  Mr.  Moreton  are  not  merely  per- 
sonal, but  social.  Their  families  mingle  intimately, 
and  their  sympathies  and  enjoyments  have  been  com- 


68  PRESIDENT   AND   BOARD   OF   DIRECTORS. 

mon.  The  sliock  of  bankruptcy  is  suspended  over 
the  whole  circle.  Instead  of  renewing  at  evening  the 
pleasures  in  which  he  has  so  often  forgotten  the  an- 
noyance of  his  daily  duties,  he  fancies  dark  halls, 
deserted  parlors,  separated  playmates  and  broken 
"  silver  cords." 

The  two  have  withdrawn  into  an  inner  room,  and 
it  is  less  the  merchant  and  the  banker,  than  friend 
and  friend ;  nor  could  an  impartial  observer  tell  from 
the  expression  of  anxiety  and  despair  in  their  counte- 
nances, upon  whom  the  blow  is  to  fall  the  heavier. 

"  Must  my  name  be  dishonored  for  the  want  of  a 
sum  comparatively  so  trifling  as  this  ? — Can  you  give 
me  no  suggestion  ?" 

"  I  cannot," 

It  seems  to  Mr.  Moreton  that  he  could  lay  down  his 
life  with  less  pain  than  he  can  submit  to  the  forfeiture 
of  his  commercial  honor.  His  reputation,  the  success 
of  his  whole  life,  the  labor  of  thirty  years,  are  slipping 
from  his  grasp  with  the  few  remaining  seconds  of  the 
hour ;  and  then  they  are  gone !  This  is  no  exaggera- 
tion of  the  real  mental  suffering  of  the  sensitive  and 
high-spirited  merchant  on  the  brink  of  bankruptcy, 
nor  of  the  painful  interest  of  the  bank-officer  in  the 
fortunes  of  his  friend. 

In  many  cases,  the  disappointed  applicant  retires 
cursing,  in  soliloquy,  the  bank  as  an  incorporated 
nuisance,  and  the  President  as  an  unfeeling  monster. 
The  last  thought  that  occurs  to  him  is  that  his  own 
recklessness  in  trade  or  expenditure  has  had  anything 
to  do  with  bringing  his  affairs  into  a  bad  condition ;  or 
that  a  bank  with  fifteen  hundred  dealers  is  liable  to 


THE   POUND   OF  FLESH.  69 

have  its  deposits  drawn  upon  faster  than  its  discounted 
bills  mature,  and  that  in  such  a  case  it  is  more  help- 
less than  an  individual  merchant ;  it  can  neither  bor- 
row nor  create  capital. 

It  has  been  considered  an  axiom  of  financial  wisdom 
to  repudiate  "  indulgence"  as  inconsistent  with  sound 
banking.  The  man  who  recognizes  only  the  "  pound 
of  flesh,"  is  regarded  as  an  exemplary  bank  officer. 
"  He  is  an  excellent  man,  but  too  sympatlietic  for  a 
President,"  is  not  an  unusual  remark,  when  the  quali- 
fications of  a  candidate  are  discussed.  This  is  prac- 
tically an  assumption  of  the  superiority  of  capital 
over  trade  and  labor ;  but  wherever  a  fair  commer- 
cial sympathy  is  allowed  to  displace  the  maxim  of 
Shylock,  debts  are  more  honorably  settled,  defaults 
more  promptly  repaired,  and  the  obligations  of  credit 
more  respected.  A  bank  president  who  can  intrench 
himself  behind  bags  of  coin  and  look  on  the  disasters 
of  the  market  without  involuntary  sympathy  for  the 
sufferers,  is  unworthy  of  public  confidence.  He  is  an 
enemy  to  commerce. 

All  the  best  interest  of  society  are  injured  by 
financial  pressure.  Education  is  interrupted  in  fami- 
lies. Private  enterprise  is  stopped,  public  works  are 
suspended,  and  wages  are  cut  off.  These  results  have 
frequently  been  brought  about  or  exaggerated  by 
the  bad  management  of  banks ;  therefore,  to  vest  such 
a  power  in  weak  hands  is  a  public  wrong. 


70  THE   CASHIEE. 


CHAPTER   in. 


THE        CASHIEE. 


The  internal  mechanism  and  order  of  a  bank  depend 
chiefly  on  the  Cashier.  For  the  greater  part,  his 
powers  are  concurrent  with  those  of  the  President ; 
but  thej-  extend  specifically  to  the  details  of  the  busi- 
ness, embracing  the  supervision  of  the  accounts,  the 
correspondence  with  other  banks,  and  more  active 
intercourse  with  the  dealers. 

He  keeps  a  record  of  the  transactions  of  the  Board 
of  Directors,  to  which  he  is  Acting  Secretary. 

He  signs,  with  the  President,  the  certificates  of  stock 
issued  to  shareholders,  and  the  bank  bills  which  are 
paid  out  as  money. 

Checks  drawn  on  other  banks  are  usually  signed 
by  him.  When  he  is  absent,  they  are  signed  by  the 
President. 

He  indorses,  personally  or  by  deputy,  all  drafts 
and  promissory  notes  which  are  sent  to  other  parts 
of  the  country  for  collection. 

All  drafts  and  notes  received  from  others  for  pay- 
ment in  New  York  are  indorsed  subject  to  his  order; 
but  on  these,  the  official  stamp  of  the  bank  is  mostly 
admitted  as  a  substitute  for  his  formal  indorsement 
as  follows : 


■Just  Elected. 


OFFICIAL   DUTIES.  71 

Pay  Walter  Mead^  Esq. 

Cashier,  or  order. 
Akdkew  Mason,  Cashier. 


EECEIVEB   PATALENT. 
WALTER  MEAD,  CASHIEE. 


The  stamp  is  generally  impressed  with  a  kind  of  oil- 
paint  or  ink  which  is  not  easily  erasible.  The  bank 
records  are  accessible  for  legal  proof,  and  every  note 
paid  through  it  could  be  traced  and  verified  in  case 
of  dispute. 

The  correspondence  of  the  bank  is  conducted  in  the 
name  of  the  Cashier,  officially. 

In  all  cases  where  his  signature  alone  is  required, 
that  of  the  President  may  be  substituted ;  but  the 
alternate  substitution  is  not  allowed. 

When  the  President  is  absent,  the  Cashier  is  the 
principal  executive  manager  of  the  business ;  and  he 
is  often  so,  practically,  when  that  officer  is  present. 
In  several  of  our  largest  city  banks,  the  Presidency  is 
a  mere  sinecure  accorded  to  wealth,  age,  or  influence, 
with  little  reference  to  capacity,  the  Cashier  being 
regarded  in  fact  as  the  superior  officer. 

He  gives  bonds  to  the  amount  of  ten  or  twenty 
thousand  dollars. 

Bonds  are  intended  as  indemnity  in  case  of  fraud. 
They  do  not  cover  loss  by  indiscretion,  neglect,  or 
errors  of  judgment,  however  gross  these  may  be. 

Formerly,  the  Cashier  was  forbidden  to  hold  stock 
in  the  bank  of  which  he  was  an  officer,  for  the  reason, 
perhaps,  that  it  would  place  him  too  nearly  on  an 
equality  with  the  President  and  directors.    Possibly 


72  THE  CASHIEE. 

it  was  feared  tliat  a  desire  to  increase  his  own  divi- 
dends might  induce  a  speculative  employment  of  the 
funds.  It  was  considered  improper  also  that  he 
should  keep  his  personal  account  in  the  bank,  a  restric- 
tion that  was  extended  likewise  to  the  President, 
under  a  general  impression  that  it  might  be  a  bar  to 
abuses  of  privilege.  These  restrictions  are  still  par- 
tially in  force,  though  mostly  regarded  with  indiffer- 
ence. Tliey  would  be  a  slight  obstacle  to  fraud  with 
men  who  are  not  restrained  by  a  sense  of  right  within 
themselves.  At  the  same  time,  experience  has  shown 
the  wisdom  of  absolute  rules  in  moneyed  institutions 
by  which  the  first  approaches  to  temptation  are  kept 
out  of  sight. 

The  Cashier  receives  his  appointment  from  the 
Board  of  Directors,  who  may  also  remove  him  in  their 
discretion.  He  retains  oflBce  "  during  good  behavior," 
unless,  as  it  occasionally  happens,  he  is  ousted  in  a 
personal  quarrel. 

When  a  bank  officer  resigns  his  place  without  ex- 
planation or  obvious  cause,  such  as  ill-health  or 
change  of  residence,  it  is  generally  understood  that 
he  has  been  guilty  of  some  impropriety,  or  has  been 
found  incompetent.  This  would  be  likely  to  defeat 
his  application  for  employment  in  other  banks. 

It  is  so  grave  a  matter  to  charge  a  bank  officer  with 
default,  even  if  circumstances  are  strongly  against  him, 
and  might  be  so  difficult  of  proof  if  he  should  stand  on 
the  defensive,  that  he  is  mostly  allowed  to  retire  with- 
out official  exposure,  unless  the  amount  in  question 
is  very  large,  or  his  conduct  has  been  unusually 
atrocious.    His  bondsmen  are  personal  friends  who 


SALAKY.  ■  73 

are  anxious  to  screen  him  from  public  disgrace,  and 
thej  manage  to  effect  an  amicable  compromise. 
Besides,  a  bank  has  nothing  to  gain  by  thrusting  its 
misfortunes  out  into  public  view.  The  conviction  oi' 
the  offender  would  not  shield  it  from  the  sus- 
picion of  having  careless  or  ill-guarded  methods  of 
business. 

Although  the  power  of  appointing  and  removing 
the  Cashier  is  vested  in  the  Board  of  Directors,  he 
is  not  unconditionally  subordinate  to  them.  He  is 
regarded  by  the  stockholders  as  their  direct  repre- 
sentative and  trustee.  If  the  President  or  directors 
should  attempt  to  use  the  funds  of  the  bank  for  impro- 
per or  hazardous  purposes,  the  Cashier  might  author- 
itatively interpose.  It  would  be  his  duty  to  do  so. 
He  may  object  to  any  measures  which  he  deems 
injurious  to  the  business  or  character  of  the  institution, 
without  endangering  the  tenure  of  his  office  and  with- 
out offence  to  his  superiors.  If  faithful  and  well  qual- 
ified, he  is  their  co-ordinate  in  the  administration  of 
affairs. 

The  salary  of  the  Cashier  depends  on  the  peculiar- 
ity of  his  duties.  In  some  of  the  smaller  banks, 
where  he  is  a  mere  clerk,  it  is  two  or  three  thousand 
dollars  a  year;  while  in  the  larger  where  he  is  an 
executive  officer  of  high  grade,  it  ranges  from  five 
to  ten  thousand  dollars.  The  latter  sum  is  proba- 
bly the  highest  paid  in  the  City  of  ISTew  York.  In 
some  cases  he  derives  perquisites  by  acting  as  trustee 
or  treasurer  for  other  companies.  His  compensation 
is  made  liberal,  that  he  may  be  under  no  necessity  to 
engage  in  other  business,  which,  besides  distracting 


74:  THE  OASHIEK. 

his  thouglits,  might  involve  him  in  debt  and  create 
conflict  of  interests. 

The  Cashier  reaches  his  desk  about  nine  o'clock  in 
the  morning.  His  first  care  is  to  examine  the  con- 
tents of  the  letters  received  by  mail.  In  the  larger 
banks  an  Assistant  Cashier  or  Corresponding  Clerk 
attends  wholly  or  in  part  to  this  service.. 

The  inclosures  of  letters  consist  of  bank  checks, 
personal  checks,  bank  bills,  drafts  at  sight  or  for 
acceptance,  promissory  notes  for  collection,  bills  of 
exchange — foreign  or  domestic,  government  warrants, 
railroad  coupons,  and  any  other  form  of  document 
which  represents  money.  Land  warrants  are  often 
sent  to  the  city  for  sale,  as  it  is  here  that  the  readiest 
market  is  afforded  by  the  competition  of  emigrants 
and  speculators ;  also,  certificates  of  stock  in  banks, 
in  mining,  manufacturing,  and  insurance  companies  ; 
and  State,  County,  and  City  bonds,  which  have  been 
issued  for  public  improvements. 

The  first  thing  is  to  compare  these  inclosures  with 
the  record  of  the  letter.  In  banks  of  limited  corre- 
spondence, the  Cashier  may  check  off  each  item,  and 
hand  over  the  documents  to  the  clerks  in  whose 
departments  they  are  to  be  entered  ;  but  in  those  of 
widely-extended  business  he  requires  several  assist- 
ants. Sometimes  the  letter  is  passed  successively  to 
the  different  clerks,  each  of  wliom  marks  his  initials 
opposite  to  what  he  takes  out,  and  it  is  then  returned 
to  the  Cashier  so  vouched. 

Most  of  the  documents  are  made  subject  to  the 
indorsement  of  the  receiving  bank,  which  is  an 
effectual  bar  to  their  abstraction  and  use  in   other 


COKKESPONDENCE.  75 

channels,  except  by  a  forged  indorsement.  Bank  notes 
might  be  taken  by  a  dishonest  clerk,  without  imme- 
diate detection ;  but  the  deficiency  being  reported 
to  the  remitting  bank,  suspicion  and  probable  dis- 
covery would  follow.  Bonds  and  stocks  could  not  be 
surreptitiously  used  without  discovery.  A  fraudulent 
holder  would  be  arrested,  when  he  came  forward  to 
receive  the  interest.  The  bank  correspondence  is, 
therefore,  effectually  guarded  against  fraud  by  the 
clerks  who  may  be  employed  in  it,  unless  they  have 
the  hardihood  to  attempt  forgery ;  and  this  could  not 
long  be  concealed. 

The  practice  is  common  among  our  city  banks  to 
add  the  available  checks  that  are  received  in  the 
morning  letters  to  the  exchanges,  before  these  are 
sent  to  the  Clearing  House.  The  amount  so  used, 
which  in  some  of  the  banks  with  an  extensive  corre- 
spondence frequently  reaches  three  hundred  thousand 
dollars,  is  equivalent  to  so  much  deposit  of  the  day 
before.  It  is  the  saving  of  one  day's  interest  upon  it ; 
or,  practically,  the  specie  of  the  bank  is  increased  by 
the  sum  so  used,  although  the  benefit  that  results  from 
it  is  more  apparent  than  real,  since  other  banks  use 
the  checks  that  are  drawn  against  the  remittance  in 
the  same  manner,  and  neutralize  the  gain.  The  hour 
devoted  to  the  final  preparation  of  the  exchanges  by 
the  addition  of  these  checks,  which  must  be  culled 
from  many  letters,  is  one  of  the  busiest  of  the  day. 

The  number  of  letters  received  by  a  bank  of  the 
first  class  ranges  from  one  hundred  and  fifty  to  three 
hundred  per  day.  The  majority  of  them  are  formal, 
being  merely  an  abridged  statement  of  the  inclosures ; 


76  THE   CASHIEK. 

and  these  can  be  acknowledged  by  a  corresponding 
clerk.  But  many  relate  to  matters  which  require  the 
personal  attention  of  the  Cashier ;  such  as  the  pur- 
chase or  sale  of  stocks,  the  re-discount  of  bills  receiv- 
able, errors  and  misunderstandings  of  account,  special 
instructions  relative  to  suspended  debts,  the  capital 
and  credit  of  merchants,  and  so  forth. 

The  number  of  letters  sent  out  daily  is  about  the 
same  as  received — that  is,  received  and  sent,  from 
three  to  six  hundred. 

"When  the  money-market  is  "  easy,"  the  routine  of 
the  Cashier's  employment  is  very  agreeable.  The 
different  departments  of  the  bank  move  along  harmo- 
niously, and  without  haste.  The  dealers  call  and 
transact  their  business,  and  go  away  in  good  humor. 
If  they  want  paper  discounted,  it  is  done  promptly. 
They  mix  a  pleasant  sociality  with  their  negotiations. 
They  often  sit  down  and  talk  on  indifferent  subjects, 
as  in  the  common  intercourse  of  private  life.  'No 
topic,  grave  or  light,  is  out  of  place  in  the  rooms  of 
the  Cashier  or  the  President — ^politics,  theology,  his- 
tory, education,  public  improvements,  and  personal 
matters,  are  all  mixed  up  together.  Either  officer 
will  discount  a  note  without  interrupting  the  train  of 
his  ideas,  and  without  dropping  a  sentence.  "  Let  us 
have  credit  for  that  ?" — "  Yes,  sir" — is  a  trifling  inter- 
polation, that  may  give  to  a  highly  esteemed  customer 
the  privilege  of  drawing  checks  to  the  amount  of 
twenty  or  thirty  thousand  dollars.  ISTothing  can  be 
more  pleasant  than  the  call  of  a  director  to  invite  the 
Cashier  to  an  evening  party.  Sometimes  it  extends 
to  a  bathing  or  a  fishing  excursion,  the  occasional 


A  TIGHT   MAKKET.  T7 

enjoyment  of  "which  is  not  inconsistent  with  the  inter- 
ests of  the  institution.  The  President  cheerfully 
assumes  extra  duty  on  such  occasions,  and  takes  his 
turn  when  he  has  the  opportunity.  The  hours  of 
attendance  at  the  bank  are  neither  so  early  in  the 
morning,  so  late  in  the  afternoon,  nor  so  constant 
during  the  day,  as  to  prevent  a  wide  latitude  of  per- 
sonal leisure  and  polite  indulgence.  There  is  excite- 
ment enough  in  these  concomitants  of  "  an  easy  mar- 
ket" to  make  the  office  of  Cashier  one  of  the  most 
desirable  that  the  community  affords. 

But  the  time  comes  for  this  agreeable  experience 
to  terminate.  The  market  shows  symptoms  of  "  tight- 
ness." The  amount  of  paper  offered  for  discount  is 
suddenly  doubled,  and  the  amount  discounted  is 
reduced  one-half.  Merchants  are  not  satisfied  with 
their  usual  preparations  for  the  future.  They  are  bent 
on  accumulating  twice  as  much  ready  money  as  they 
need ;  and  they  begin  to  call  for  loans  as  soon  as  the 
Cashier  reaches  his  desk  in  the  morning,  before  the 
bank  doors  are  officially  opened.  Those  whose  offer- 
ings have  been  rejected  by  the  Board  of  Directors 
come  to  ask  for  explanation  and  to  make  complaints. 

"  What  is  the  matter,  Mr.  Cashier?" 

"  Our  means  are  reduced,  sir." 

"  Is  my  paper  too  long  ?" 

"  No,  sir." 

"  Is  it  too  short  ?" 

"  m,  sir." 

"  Then  what  is  the  difficulty  ?    Do  tell  me." 

"  Our  deposits  have  fallen  off,  and  we  are  obliged 
to  hold  on  to  our  receipts." 


78  THE   CASHIEK. 

"  Don't  you  like  the  names  ?" 

"  We  did  not  look  at  them.  It  was  not  worth  while 
since  we  had  no  money  to  loan." 

"  But  you  ought  to  look  at  them.  Now,  see  here — 
look  at  this,  and  that,  and  then  here"  (turning  the 
notes  over  in  his  hand),  "  and  there's  another — all 
as  good  as  wheat ! — my  dear  sir .'" 

These  two  last  words  are  spoken  with  peculiar 
emphasis. 

"  It  would  give  us  pleasure  to  pass  them  all  to  your 
credit,  sir.     They  are  not  objectionable." 

"  Then,  why  not  slip  them  in  at  once  and  be  done 
with  it." 

"  Because,  my  good  friend,  it  is  simply  impossible. 
We  have  not  the  means." 

"  Oh,  but  my  dear  Mr.  Cashier — come,  come,  don't 
say  so !  These  are  only  four  little  notes — ^less  than 
ten  thousand  dollars  in  all !" 

"  My  friend,  you  must  believe  me.  Our  coin  is 
reduced,  and  we  cannot  discount  a  dollar." 

The  Cashier  is  in  the  midst  of  an  important  letter, 
and  writes  a  word  at  a  time  as  he  answers  this  shower 
of  questions.  The  customer  is  at  length  satisfied  that 
he  can  get  nothing  by  further  importunity,  and  goes 
away,  promising  to  come  back  to-morrow. 

No  sooner  is  he  gone,  than  his  place  is  filled  by 
another,  who  asks  the  same  questions  and  gets  the 
same  answers.  The  conversation  is  varied  by  the 
temper  and  circumstances  of  the  apijlicant. 

One  of  the  clerks  comes  to  him  with  a  gentleman, 
whom  he  introduces  as  Mr.  Tarbox. 

The  Cashier  says  mentally :     "  What  business  have 


RECEIVING   NEW   ACCOUNTS.  79 

strangers  to  come  here  for  discounts?  We  have 
enough  to  do  to  take  care  of  our  old  customers." 

The  clerk  adds :  "  Mr.  Tarbox  wishes  to  open  an 
account,  sir." 

Oh,  that  is  quite  another  matter ! 

"  Mr.  Tarbox,  I  am  happy  to  see  you,  sir" — shaking 
hands.  The  Cashier  is  very  polite.  It  is  an  agree- 
able transition  from  being  bored  for  loans,  to  find  a 
man  who  really  has  money  in  his  pocket  to  deposit  in 
the  bank. 

The  several  dealers  in  waiting  give  way,  and  allow 
the  Cashier  and  Mr.  Tarbox  to  pass  to  another  room, 
or  within  the  counters,  where  they  may  talk  without 
interruption. 

It  is  one  of  the  most  important  duties  of  the  bank 
officer  to  receive  new  accounts. 

"  In  what  branch  of  business  are  you  engaged,  Mr. 
Tarbox?" 

"  In  the  manufacture  and  sale  of  clocks." 

"  Are  you  a  resident  of  the  city  ? 

"  Yes,  sir.  My  store  is  at  ISTo.  2000  Pearl  street ; 
but  my  manufactory  is  at  'New  Haven." 

"  "What  is  your  capital  ?" 

"  It  was  originally  thirty  thousand  dollars ;  and 
my  profits  have  now  increased  it  to  sixty  thousand." 

Other  questions  follow,  relating  to  the  extent  of 
Mr.  Tarbox's  business,  and  to  whatever  may  affect 
his  credit.  He  finally  refers  the  Cashier  to  Mr.  Starr, 
one  of  the  directors  of  the  bank,  with  whom  he  has  a 
personal  acquaintance. 

"  That  will  do,  sir.  I'll  take  your  signature  in  this 
book,  and  instruct  the  Teller  to  receive  your  deposit." 


80  THE   CASHIER. 

The  Cashier  seizes  his  first  leisure  moment  to  post 
to  his  Reference  Ledger  the  particulars  stated,  with 
any  additional  information  that  he  may  get  from  Mr. 
Starr ;  and  when  Mr.  Tarbox  at  a  future  time  ofiers 
his  bills  receivable  for  discount,  the  whole  story  is 
brought  out  and  read  to  the  Board  of  Directors. 

Thus,  in  the  outset  of  the  Cashier's  personal  inter- 
course with  the  dealer,  begins  that  scrutiny  of  char- 
acter on  one  hand  and  imparting  of  confidence  on  the 
other,  which  establishes  a  more  intimate  relation  than 
exists  in  ordinary  commerce. 

It  is  true,  Mr.  Tarbox  is  rather  conferring  favor 
than  asking  it,  by  opening  his  account.  But  he  is 
laying  the  foundation  for  years  of  continual  borrow- 
ing and.  lending  between  the  bank  and  himself;  and 
the  general  convenience  of  his  business  depends  much 
on  his  relations  with  the  officers.  He  is  preparing 
the  hinge  of  success,  on  which  may  turn  a  thousand 
good  bargains  during  the  next  ten  years. 

It  is  a  serious  mistake  for  a  dealer  to  decline  giving 
to  a  bank  officer  a  candid  statement  of  his  aflfairs, 
when  asked  for  it.  Confidence  fails  at  once,  and  it 
can  rarely  be  re-established. 

Eight  or  ten  anxious  customers  await  the  Cashier's 
release  from  Mr.  Tarbox.  Among  them  are  some  of 
his  best  personal  friends.  They  will  not  be  put  oif 
by  his  first  assurance  that  the  bank  has  no  money  to 
loan.  Each  one  considers  his  case  entitled  to  special 
attention  above  all  others. 

"  Good  morning,  Mr.  Cashier." 

"  Good  morning,  Mr.  A." 


PERSONAL   SOLICITATION.  81 

"  I  am  very  much  surprised  to  find  that  my  paper 
is  not  discounted,  sir." 

"  Ah,  my  friend,  I  am  sorry ;  but  you  see  that 
others  are  in  the  same  predicament." 

Yes,  sir ;  but  that  gives  me  no  comfort.  I  have 
my  notes  to  pay." 

"  The  Board  did  their  best,  Mr.  A.  Our  receipts 
happen  to  be  very  small  j  ust  now,  and  we  have  been 
sadly  beaten  at  the  Clearing  House  for  three  morn- 
ings in  succession." 

"  Mr,  Cashier,  this  paper  is  A 1.  You  have  nothing 
better  on  your  books.  The  amount  is  not  large,  and 
the  time  is  short." 

"  It  is  impossible  sir,  for  the  bank  to  discount  it. 
We  are  obliged  to  turn  away  every  application  at 
present." 

"  Have  you  looked  at  my  account  ?" 

"  I  have  not." 

"  Then  you  must  do  so  and  consider  Tvhether  I  am 
not  entitled  to  all  that  I  ask." 

"  The  Board  of  Directors  have  left  me  no  discretion. 
They  decided  that  it  was  not  safe  to  loan  a  single 
dollar." 

"  My  balance  has  not  fallen  below  three  thousand 
dollars  for  months  past.  I  make  no  unreasonable 
requests." 

"  It  is  true,  sir,  that  your  requests  are  reasonable, 
and  that  your  account  entitles  you  to  a  liberal  line. 
But  what  can  we  do  without  the  means  of  doing?" 

"  The  whole  amount  of  my  accommodations  for  a 
year  have  been  exceedingly  moderate  I  do  not 
trouble  you  with  incessant  calls." 

4* 


82  THE  CASHIEK. 


"  That  is  60,  sir,  but^" 


"  Well,  Mr.  Cashier,  I  claim  to  be  an  exception  to 
your  general  rule.  You  must  discriminate  between 
men  who  bore  you  to  death  all  the  time,  and  those 
who  are  reasonable  in  their  demands.  It  is  seldom 
that  I  ask  you  for  discounts,  and  when  I  do,  I  want 
them." 

"l!^o  doubt,  sir;  and  I  assure  you  that  we  have 
every  disposition  to  treat  you  liberally.  It  is  a  very 
unpleasant  duty  to  reject  such  claims  as  yours ;  but  I 
tell  you  again,  and  I  want  you  to  believe  me,  that  we 
have  no  alternative.     We  cannot  move  an  inch." 

"  But  sir,  you  must  move  an  inch  1  Do  you  pretend 
to  tell  me  that  you  will  enjoy  the  use  of  my  balance 
of  three  or  four  thousand  dollars,  lending  it  out  to 
other  people,  and  then  when  I  want  to  get  a  little  loan 
myself,  you  will  turn  round  and  say  you  can't,  and  you 
have  no  discretion  and  no  power  ?  What  do  I  care, 
if  you  are  short  at  the  Clearing  House  ?  Does  that 
pay  my  notes  ?  Now,  sir,  1  will  tell  you  and  your 
Board  of  Directors  that  I  am  not  a  man  to  submit  to 
such  treatment !" 

"  Mr.  A.  if  you  are  a  reasonable  man — " 

"7/^1  am  a  reasonable  man !  I  am  a  reasonable 
man,  sir,  and  that's  just  the  whole  case.  Because  I 
am  so,  I  want  my  j)aper  discounted.  It  is  my  right, 
sir,  and  I  don't  mean  to  give  it  up  !" 

"  Well  sir,  it  is  your  right,  and  I  don't  want  you 
to  give  it  up.  But  you  must  listen  to  me,  while  I  put 
the  matter  to  your  own  judgment — " 

"  I  have  settled  it  in  my  judgment  already.  I  don't 
want  to  hear  this  stuff  about  the  Clearing  House! 


•Now,  sir,  I  will  tell  you  and  your  Board  of  Directors,  tliat  I  am  not  a  man 
to  submit  to   such  treatment." 


PUTTING   OFF   CUSTOMEKS.  83 

The  Clearing  House  is  nothing  to  me  !  my  notes  have 
to  be  paid — thaCs  my  judgment,  sir !" 

"  Do  you  think,  Mr.  A.,  that  I  am  made  of  gold,  or 
that  I  can  turn  back  the  tides  of  the  N^orth  River  V 

"  I  know  very  well  that  you  cannot  change  the 
market ;  but  you  can  discount  this  paper." 

"  My  dear  sir,  I  cannot  do  it  without  endangering 
more  and  larger  interests  than  yours.  Our  stock- 
holders and  creditors  generally  have  rights  as  well  as 
you,  A  failure  to  pay  our  balances  at  the  Clearing 
House  would  be  a  fatal  blow  to  our  credit — equiva- 
lent to  a  protest !  Our  deposits  would  be  withdrawn, 
and  we  could  no  longer  keep  yom'  present  discount 
line  where  it  is,  which  we  hope  to  do  by  a  course  of 
mutual  indulgence  with  our  dealers.  There  is  no 
possible  remedy  for  this  state  of  things  but  to  wait 
for  tiie  gradual  maturity  of  our  bills  discounted.  If 
you  will  bring  me  your  paper  some  days  hence,  you 
will  probably  find  us  in  better  condition." 

Mr,  A,  yields  in  a  moment  of  cooler  judgment. 
If  the  Cashier,  however,  had  treated  him  with  a  sullen 
refusal,  making  no  explanation,  he  would  have  gone 
away  in  a  fit  of  anger,  and  his  friendly  relations  with 
the  bank  might  cease. 

This  may  be  called  the  science  of  contact.  In  a 
tight  market,  bank  ofiicers  are  every  hour  brought 
into  collision  with  the  most  imposing  interests  of  com- 
merce in  the  hands  of  men  unaccustomed  to  denial, 
whom  it  is  very  desirable  to  conciliate,  and  very  easy 
at  such  times  to  ofi*end.  Instances  are  frequent  in 
which  the  applicant  has  a  large  stake  in  the  negotia- 
tion.    His  credit  and  continued  solvency  may  be  at 


84  THE   CASHIEK. 

risk.  It  may  readily  be  imagined  what  arts  of  per- 
suasion and  earnest  entreaty  are  then  employed. 

Messrs.  B.  C.  D.  and  others  who  have  been  waiting 
impatiently  for  Mr.  A.  to  finish  his  interview,  succes- 
sively present  their  claims.  Each  one  withdraws  the 
Cashier  into  a  comer,  or  to  his  private  room,  and  in- 
sists on  the  special  character  of  his  application.  The 
failure  of  all  who  have  preceded  him  does  not  con- 
vince the  last  one  that  his  chance  is  hopeless.  N^one 
will  believe  that  the  available  resom-ces  of  a  bank  can 
be  so  reduced  as  the  Cashier  represents,  and  the  ma- 
jority attribute  his  refusal  to  the  timidity  or  the 
caprice,  if  not  to  some  less  creditable  motive,  of  the 
officers  and  directors. 

The  Cashier  is  again  seated  at  his  table,  preparing 
to  resume  an  unfinished  letter;  but  before  he  can 
concentrate  his  thoughts,  the  Specie  Clerk  comes  in 
from  the  Clearing  House  and  announces  the  result  of 
the  exchange : 

"  Debtor,  sir,  two  hundred  thousand  dollars." 

"  What !     Debtor  again «" 

«  Yes,  sir." 

"  Is  that  possible  ?  Have  you  made  no  mistake, 
Joseph  ?  I  added  more  than  that  from  the  morning 
letters !" 

"  I  am  sorry  to  say  it,  sir,  but  it  is  certainly  so,  and 
our  neighbors  across  the  street  are  worse  ofi'  than  we 
are." 

All  other  employment  must  give  way  before  the 
indispensable  matter  of  providing  for  the  payment  of 
the  Clearing  House  debt.  The  President  is  sm*- 
rounded  by  six  or  eight  of  his  particular  friends,  who 


IN   DEBT   TO   THE   CLEAKIKG    HOUSE.  85 

are  endeavoring  to  find  some  cause  for  the  sudden 
stricture  of  the  market.  One  ascribes  it  to  the  exces- 
sive importation  of  dry-goods,  consequent  on  a  reduc- 
tion of  duties  ;  another  declares  it  is  the  competition 
of  the  railroad  debt  with  commerce ;  another,  that  it 
is  the  natural  consequence  of  extravagant  living.  The 
discussion  is  rather  disorderly,  and  well  adapted  to 
spread  excitement  among  the  dealers  who  come  in  to 
transact  business.  They  see  that  "the  great  mer- 
chants" are  roused  ;  and  thus,  from  many  banks, 
increased  anxiety  and  agitation  is  proj^agated  through 
the  community. 

The  Cashier  can  have  no  assistance  from  the  Presi- 
dent under  these  circumstances ;  but  leaves  him  to 
the  brunt  of  importunity  by  the  dealers  while  he  goes 
out  to  seek  aid  from  another  bank.  He  may  be  so 
fortunate  as  to  obtain  it,  and  to  be  again  at  his  desk 
in  half  an  hour.  Borrowing,  however,  brings  no  per- 
manent relief.  He  gives  a  check  for  the  amount, 
which  will  come  in  against  the  bank  in  the  exchanges 
of  the  next  day,  and  the  debt  recurs.  How  to  pro- 
vide for  this,  is  a  mental  burden  scarcely  less  engross- 
ing than  that  which  he  has  just  discharged.  There 
is  but  one  source  from  which  permanent  improve- 
ment in  the  funds  can  be  derived,  and  that  is  the 
dejposits.  If  these  should  increase,  the  bank  would 
experience  immediate  relief,  but  if  they  continue  to 
fall,  the  debt  of  the  bank  increases  from  day  to  day, 
in  spite  of  all  temporary  expedients.  The  anxiety 
that  weighs  on  the  mind  of  the  bank  officer  in  this 
extremity  cannot  be  appreciated  by  the  dealers.  It 
ought  to  be  a  sufficient  excuse  for  any  apparent 


86  TIJE   CASHIER. 

want  of  consideration  for  their  personal  embarrass- 
ment. 

This  state  of  affairs  is  in  strong  contrast  with  that 
which  existed  but  a  few  days  before.  It  is  not  only 
in  the  officers'  department  that  a  change  has  taken 
place.  The  number  of  persons  who  come  into  the 
bank,  for  one  purpose  or  another,  is  quadrupled.  They 
crowd  and  run  against  each  other.  Patience,  and 
even  civility,  is  overborne  by  the  urgency  of  each 
man's  errand.  The  most  trifling  circumstances  pro- 
voke angry  disputes  between  the  dealers'  clerks,  and 
the  book-keepers  or  tellers.  A  general  excitement  of 
manner  is  evident,  and  the  shuffling  of  feet  and  the 
confusion  of  voices  do  not  cease  for  an  instant. 

At  the  moment  when  the  Cashier  is  again  ready  to 
resume  his  correspondence,  a  man  enters  the  bank 
with  a  hurried  step,  and  manifestly  in  a  violent  pas- 
sion: 

"  Mr.  Cashier,  what  kind  of  Tellers  do  you  keep  in 
your  bank  ?" 

"  We  mean  that  they  shall  be  gentlemen,  sir." 

Mr.  Kight  linds  it  very  difficult  to  control  him- 
self. He  thrusts  his  bank-book  before  the  Cashier, 
and  points  with  trembling  hand  to  an  entry  which 
shows  that  he  had  that  morning  made  a  deposit  of 
fifteen  hundred  dollars. 

"  Do  you  see  that,  sir  ?" 

The  Cashier  sees  it. 

"  Well,  sir — your  Teller  has  refused  to  pay  my 
check  for  that  amount,  notwithstanding  the  money 
is  to  my  credit !  He  has  sent  it  back  to  another 
bank,  and  my  name  is  dishonored,  sir!      Isn't  this 


Mr.  Kight  Up.    "  Do  you  see  that,  sir  ?  " 


EIGHT   &   WESTG.  87 

a  pretty  tale,  that  a  man's  credit  is  to  be  ruined  by 
a  miserable  teller  who  doesn't  know  his  duty  !" 

"  I  think  he  knows  his  duty,  Mr.  Kight.    You  have 
probably  made  a  mistake  yourself." 

The  cool  manner  of  the  Cashier  does  not  soothe  his 
excited  customer.  He  denies  angrily  that  he  has 
made  any  mistake,  and  attracts  the  notice  of  all  the 
clerks  by  the  violence  of  his  language  and  his  defiant 
air,  as  the  two  pass  to  the  desk  of  the  book-keeper  to 
examine  his  account.  Tlie  ledger  shows  that  his 
balance  was  less  than  fifty  dollars  on  the  day  before 
when  he  drew  his  check  for  fifteen  hundred,  and  it  is 
apparent  that  he  had  obtained  the  uee  of  that  much 
money  one  day  in  advance  of  his  deposit.  Tlie  pro- 
cess is  well  known  to  bank  ofiicers  and  clerlss  under 
the  name  of  "  kiting."  It  is  often  resorted  to  as  a 
last  expedient  to  raise  funds,  by  parties  who  know 
better.  Two  parties  who  keep  accounts  in  different 
banks  may  change  checks,  and  each  deposit  that 
of  the  other,  if  their  certification  is  not  required; 
and  then  each  may  draw  out  the  money.  Mr. 
Kight  may  have  supposed  that  his  deposit  of  the 
following  morning  would  be  admitted  to  pay  his 
check;  but  the  Cashier  explains  to  him  that  the 
exchange  for  the  Clearing  House  is  made  up  and 
dispatched  before  ten  o'clock,  so  that  funds  coming 
in  after  that  hour  are  necessarily  unavailable  until  the 
next  day.  He  might  even  go  so  far  as  to  show  him 
the  very  bills  that  he  had  deposited  still  unused  in 
the  drawer  of  the  Receiving  Teller ;  but  Mr.  Kight 
understands  it.  He  now  expresses  his  opinion  that 
"  it  is  rather  small  business  for  a  bank  with  three 


88  THE  CASHIER. 

millions  of  capital  to  return  a  dealer's  check  for  fifteen 
hundred  dollars  when  the  money  is  actually  in  the 
bank,  even  if  it  can't  be  used  for  a  single  day." 

"  There  is  but  one  way  for  us  to  transact  business, 
Mr.  Kight,  and  that  is,  to  pay  checks  when  we  have 
the  deposit  to  pay  with,  and  to  refuse  them  when  we 
have  not." 

He  adds:  "It  is  true,  sir,  that  your  check  for 
fifteen  hundi'ed  dollars  would  make  no  sensible  diflfer- 
ence  in  our  general  balance,  but  every  overdraft  goes 
into  one  sum  in  the  Clearing  House  exchange,  and 
the  aggregate  of  overdrafts  in  this  way  has  sometimes 
reached  forty  or  fifty  thousand  dollars." 

Mr.  Kight's  deposit  is  now  available  to  him,  since 
the  Teller  has  received  payment  for  the  dishonored 
check  from  the  bank  to  which  he  returned  it.  He 
requests  that  it  may  be  certified,  with  the  intent  to 
redeposit  it  in  the  same  channel  as  before,  and  so  rub 
out  the  discredit  which  his  good  name  has  sufiered  in 
that  quarter. 

But  at  this  moment  a  messenger  from  another  bank 
presents  a  check  drawn  by  Mr.  Wing  which  Mr.  Kight 
had  deposited  the  day  before.  It  is  returned  "  not 
good,"  and  Mr.  Kight  must  pay  it.  This  absorbs 
his  deposit  and  leaves  him  with  his  own  dishonored 
check  in  hand.  The  whole  transaction  is  now  fully 
exposed.  Mr.  Kight  and  Mr.  Wing  had  exchanged 
checks,  each  trusting  to  make  his  account  good  by  an 
early  deposit  on  the  following  morning ;  but  their 
plan  was  thwarted  in  both  banks  by  the  vigilance  of 
the  Paying  Teller. 

If  the  Teller,   instead  of  returning  Mr.  Kight's 


Mr.  Kisht  Down. 


KITING.  89 

check  had  charged  it  against  the  morning  deposit,  he 
•would  now  have  Mr.  Wing's  dishonored  check  on  his 
hands  without  any  means  of  secnring  its  payment; 
and  it  might  be  a  total  loss  to  the  bank. 

The  quarter  of  an  hour  given  to  this  tedious  expla- 
nation is  not  entirely  thrown  away,  since  it  affords 
the  Cashier  a  reason  for  closing  Mr.  Kight's  account, 
and  thus  getting  rid  of  a  dangerous  customer. 

Intelligent  dealers  have  occasionally  contended 
that  the  true  presentation  of  a  check  through  the 
deposit  channel,  is  at  the  moment  when  the  exchanges 
are  brought  to  the  bank  counter  from  the  Clearing 
House ;  and  that  if  the  deposit  is  there  by  that  time, 
it  is  all  that  could  strictly  be  asked  of  them.  But 
if  required,  would  the  check  be  certified  by  the  bank 
on  which  it  is  drawn,  at  or  he/ore  three  o^ clock  of  the 
same  day  ?  That  is  the  test  of  right  in  the  case.  In 
fact,  a  check  is  paid  to  the  holder  at  the  moment  that 
it  is  allowed  in  his  account  so  that  he  can  draw  the 
money  for  it,  no  matter  by  what  bank  allowed.  On 
Mr.  Kight's  process  overdrafts  might  be  propagated 
from  day  to  day  for  any  time  or  any  amount,  by 
persons  without  a  dollar  of  capital. 

Once  more  the  Cashier  returns  to  his  desk.  A 
new  throng  of  disappointed  dealers  presses  upon  him. 
Mr,  Tarbox  is  whispering  confidentially  in  one  ear, 
and  Mr.  Jones  in  the  other.  The  Corresponding  Clerk 
thrusts  a  score  of  drafts  under  his  pen  for  indorsement. 
Dealers  in  manifest  trepidation  come  in  hastily,  and 
finding  him  pre-occupied,  go  out  again.  A  dozen  or 
twenty  wait  in  the  lobby  for  a  more  favorable  oppor- 
tunity.    One  cries  out  from  the  doorway : 


90  THE   CASHIEE. 

"  Mr.  Cashier,  can  you  draw  on  Boston  ?" 

"  I'll  ascertain  sir, — Mr.  Jones  I  will  listen  to  you 
in  a  minute. — Mr.  Tarbox,  I  must  refer  you  to  the 
President. — Mr.  Crook,  see  if  we  can  draw  on  Bos- 
ton." 

In  answer  to  as  many  different  questions  whicli  are 
spoken  in  a  confidential  tone,  the  Cashier  answers 
aloud.  "  Yes,  sir. — No,  sir. — Out  of  the  question. — 
By  no  means. — It  must  be  paid,  I  can't  help  you" — 
and  so  forth. 

Mr.  Crook  reports  that  the  bank  can  draw  on  Bos- 
ton for  twenty-five  thousand  dollars. 

"  How  much  do  you  want,  Mr.  Bell  ?  Did  you  say 
twenty  thousand  ?     Send  us  a  certified  check." 

"  Won't  you  take  A  1  paper  at  ninety  days  ?" 

"  No,  sir." 

A  very  confident-looking  personage,  who  evidently 
tliinks  his  claims  are  of  superior  consequence,  walks 
directly  to  the  Cashier,  and  lays  down  a  bundle  of 
stock  securities.  He  communicates  his  business  in  a 
whisper,  meets  with  a  flat  denial,  and  retires  in  a 
flush  of  anger. 

Mr.  Sweatem,  of  the  long-established  firm  of 
Sweatem,  Sore  &  Co.,  seizes  the  opportunity  for 
which  he  has  been  watching  an  hour  or  more,  to  urge 
his  particular  necessities.  Single  words  and  parts  of 
sentences  only  are  heard,  which  indicate  a  decided 
difference  of  opinion  between  him  and  the  Cashier. 
His  expostulations  might  be  rendered  in  a  connected 
form,  as  follows : 

"  It  will  not  do,  Mr.  Cashier,  to  cut  down  our  line 
at  present.     We  are  all  right,  and  doing  a  profitable 


Mr.  Sweatein  convincing  the  Casliier  that  his  affairs  are  in  a  very  prosperous 
condition. 


PUTTING   OFF  CUSTOMERS.  91 

business.  I  come  to  you  as  our  last  resource.  We 
have  tried  other  banks,  and  tried  our  friends  all  round, 
but  everybody  is  hard  up.  We  are  nearly  through 
our  heavy  payments.  A  few  days  more,  and  we  shall 
be  in  smooth  water.  To  be  cut  down  now — I  tell  you 
it  won't  answer !  We  have  offered  at  the  Board  four 
times  in  succession,  and  you  have  not  given  us  a  cent. 
'Novr,  Mr.  Cashier,  there's  reason  in  all  things,  you 
must  give  us  this  accommodation.  We  are  entitled 
to  it  on  every  princij)le  of  right  and  justice." 

To  all  this  the  Cashier  answers :  "  I  cannot,  my  dear 
sir,  act  in  opposition  to  the  Board  of  Directors  ;"  and 
Mr.  Sweatem  retires  discomfited. 

It  is  now  what  may  be  called  "  high  'change  "  in 
the  rooms  of  the  President  and  Cashier.  Both  officers 
are  beset  with  remonstrance  and  importunity.  The 
attacking  column  lengthens  and  shortens,  and  disap- 
pears and  comes  again ;  and  the  tail  lashes  itself  into 
an  angry  growl  at  the  tardiness  of  the  head.  A 
stranger  would  suppose  the  bank  to  be  in  a  state  of 
general  disorder,  from  the  multitude  of  dealers  at 
the  different  desks,  and  the  incessant  murmur  of 
conversation. 

Some  of  the  applications  for  money  must  be  granted 
notwithstanding  the  condition  of  the  bank  funds. 
There  are  dealers  who  have  kept  large  balances,  and 
ask  loans  for  the  first  time.  Tliere  are  also  current 
loans  in  a  critical  state  which  must  be  indulged  to 
save  the  bank  from  loss.  Seeing  that  some  are  suc- 
cessful in  their  applications,  dealers  take  offence,  and 
charge  the  officers  with  partiality. 

" It  is  not  true,  sir,  that  your  means  are  exhausted! 


92  THE   CASHIEK. 

I  have  seen  you  aiscount  paper  for  several  of  your 
favorites  since  I  have  been  waiting. 

"  Tliose  are  special  cases  which  we  cannot  refuse. 
If  your  account  were  as  good  as  theirs  without  a  cent 
of  loan,  we  would  discount  for  you  too." 

Greater  freedom  of  expression  is  commonly  indulged 
in  by  dealers  in  conversing  with  the  Cashier  than 
with  the  President,  whose  official  dignity  imposes 
more  respect  in  tone  and  manner.  The  former 
therefore,  is  more  likely  to  get  the  brunt  of  an  out- 
burst of  personal  irritation.  He  receives  it  however 
in  an  official  caj>acity,  and  does  not  allow  it  to  inter- 
rupt the  general  suavity  of  his  intercourse.  Mr. 
Boyle  has  tried  persuasion  in  vain,  and  finally  broken 
out  into  violent  abuse  of  tlie  bank. 

"  Damn  your  institution,  sir  !  The  only  thing  you 
do  is  to  supply  your  directors  and  a  few  favorites 
with  all  the  money  they  want !  Public  good  indeed ! 
Public  good !  1     It's  all  damned  nonsense !" 

"  Mr.  Boyle,  if  you  are  not  satisfied  with  what  I 
have  told  you,  go  to  the  President.  He  is  in  his 
room,  and  happens  just  now  to  be  alone." 

Mr,  Boyle  takes  off  his  hat,  which  he  had  not 
thought  of  before,  and  although  his  manner  is  not  free 
from  excitement,  it  is  reduced  by  many  degrees,  so 
that  he  would  hardly  be  identified  as  the  same  person. 

"  Mr.  President,  I  have  some  most  unquestionable 
securities  here,  amounting  to  twenty  thousand  dollars, 
on  which  I  want  a  loan  of  twelve  or  fifteen  for  thirty 
days." 

"  My  dear  sir,  you  have  come  to  the  wrong  shop. 
I'm  ve7"y  sorry  1" 


A  bii'l  Bank  Statement.    The  IJnanl  ailjoiniis  '•  witlioiit  discounting  a  dollar."' 


DESPERATION.  93 

"  Mr.  President,  can't  you  squeeze  out  that  mucli  ?" 

"  It  would  be  a  greater  gratification  to  me  than  to 
you  Mr.  Boyle,  if  I  could.  You  can  hardly  imagine 
the  pressure  that  is  on  us  now." 

"  But  consider  Mr.  President,  what  a  humiliating 
extremity  this  is !  Here  are  securities  just  as  good 
as  United  States  stock !  I  could  have  sold  them  at  a 
hundred  and  twenty  only  thirty  days  ago  and  now 
they  would  hardly  bring  par !  I  want  an  advance 
of  but  little  more  than  fifty  per  cent  on  them — the 
paltry  sum  of  twelve  thousand  dollars ;  and  I  am  told 
by  my  bank  that  it  can  give  me  no  help  with  its 
capital  of  five  millions !     "What  am  I  to  do,  sir  ?" 

"  My  friend,  with  all  my  heart  I  wish  I  could 
assist  you.  It  gives  me  pain  when  merchants  of  your 
high  standing  in  the  community  appeal  to  me  in  this 
manner,  and  the  more  because  I  am  helpless.  Surely 
you  can  borrow  from  some  source  on  that  class  of 
securities !" 

"  'No,  sir.  I  believe  there  is  not  a  bank  in  the  city 
that  is  not  very  much  in  the  same  condition  as  you 
are.  I  must,"  says  Mr.  Boyle  with  great  emphasis, 
throwing  his  securities  upon  the  table,  "  Mr.  Presi- 
dent, I  srusT  have  five  thousand  dollars  this  day  if  it 
is  only  till  to-morrow." 

"  Wait  a  moment,  sir.     I'll  consult  the  Cashier." 

The  consultation  may  result  in  giving  Mr,  Boyle 
the  privilege  of  drawing  for  five  thousand  dollars  as 
a  loan  payable  on  demand,  or  at  one  day's  notice. 
He  gladly  accepts  it,  though  it  leaves  him  at  best  in 
the  uncertainty  that  a  condemned  man  feels  when  his 
hanging  is  put  off  for  a  few  days.     His  other  obliga- 


94  THE   CASHIER. 

tions  continue  to  mature,  and  the  notice  may  come 
on  the  top  of  them  when  they  are  of  themselves  as 
much  as  he  can  bear.  This  kind  of  "  relief "  is  very 
deceptive.  It  is  bad  policy  both  for  the  bank  and 
tlie  merchant.  The  former  may  be  forced  to  sell  the 
securities  in  a  depreciated  market,  and  the  loss  sus- 
tained by  the  latter  is  so  much  out  of  his  capital  at 
the  moment  when  he  most  needs  it. 

Bank  officers  are  not  always  insensible  to  alarm 
when  respectable  merchants,  failing  in  their  best 
endeavors,  are  driven  into  a  corner  and  assume  an  air 
of  desperation.  They  know  all  the  danger  that  hangs 
over  the  market.  Credit  is  prodigiously  expanded ; 
everything  in  a  state  of  extreme  tension ;  the  public 
excitement  is  wrought  up  to  a  high  pitch  of  appre- 
hension, and  there  needs  but  a  single  failure  of  a 
"  great  house "  to  explode  the  "  mighty  bubble !" 
Who  knows  that  it  is  a  bubble  ?  "Who  knows  that 
the  highest  point  of  the  pressure  is  not  reached  to-day, 
and  that  to-morrow  the  waters  will  not  begin  to  sub- 
side ?  And  then,  gradually,  things  fall  into  their  old 
channels,  confidence  revives,  and  it  is  proved  that 
there  was  no  bubble  to  burst  after  all !  Now  if  the 
leading  and  rich  commission  or  imj)orting  house  of 
Cottonade,  Fabrique  &  Co.,  can  only  get  through  this 
last  day  of  the  pressure,  the  credit  of  the  forty  job- 
bing merchants  whom  they  have  been  compelled  to 
assist  will  remain  untarnished,  and  payments  will  go 
on  as  usual ;  but  if  they  fail,  the  forty  will  fail,  and 
the  forty  have  each  on  an  average  not  less  than  two 
hundred  thousand  dollars  of  bills  payable  out,  mak- 


A   GREAT   HOUSE   SAVED.  95 

ing  eignt  millions  scattered  through  the  various  banks, 
which  instead  of  being  paid,  will  go  to  protest  and 
drag  on  for  many  months  in  a  course  of  troublesome 
liquidation.  If  the  whole  picture  were  painted  on 
canvas,  it  could  not  be  plainer  than  it  is  to  the 
President  and  Cashier  as  they  confer  together  on 
the  propriety  of  lending  twenty  thousand  dollars  to 
Mr.  Fabriqud,  who  sits  in  an  inner  room  waiting  for 
their  decision. 

"  I  don't  see  how  we  can  safely  do  it  ?"  says  the 
President,  shaking  his  head,  "  and  yet  it  will  have  a 
terrible  effect  on  the  market !" 

"  And  his  securities  are  of  the  highest  class  too  !" 

"  Yes,  yes — the  very  best.  If  these  are  not  safe 
there  is  nothing  safe  in  the  market." 

"  Mr.  Fabrique  is  well  nigh  desperate.  I  wish  we 
could  devise  some  way  to  help  him  !" 

"  So  do  I,  with  all  my  heart.  But  we  have  run 
behind  at  the  Clearing  House  for  several  days  in 
succession,  and  we  have  every  prospect  of  doing  so 
again !" 

The  Cashier  being  the  younger  man,  has  naturally 
more  energy  of  feeling  than  the  President.  He  trusts 
that  they  "  may  not  be  so  unfortunate."  Less  gloomy 
thoughts  float  in  his  mind.  He  catches  at  contingen- 
cies which  are  too  remote  for  the  President  to  appre- 
ciate. ''  Let  us  risk  it !"  he  proposes  with  a  sudden 
renewal  of  hope  and  courage.  "  This  is  too  important 
a  house  to  be  allowed  to  go  down  in  an  hour.  We 
have  a  large  amount  of  bills  depending  on  their  cus- 
tomers being  kept  up,  and  if  they  lose  their  main 
prop —  " 


96  THE  CABHIEE. 

"  True,  true !  But  it  will  be  the  Bame  to-morrow. 
We  would  only  be  getting  deeper  and  not  save  them 
at  last !" 

"  Mr.  Fabrique  assures  me  that  this  loan  will  put 
them  through  ;  and  to  tell  you  the  truth,  Mr.  Presi- 
dent, I  fear  the  consequences  of  denial  more  than  I 
do  the  Clearing  house.  He  will  make  no  other  effort 
to-day!" 

"  "Well,  Mr.  Cashier,  if  you  think  you  can  manage 
the  Clearing  House  debt  to-morrow,  I  will  consent." 

The  house  of  Cottonade,  Fabrique  &  Co.  may,  in 
such  a  case,  be  the  key-stone  of  the  arch  by  which 
the  whole  market  is  sustained.  And  after  the  danger 
has  passed  away,  no  one  is  conscious  that  it  was  kept 
in  its  place  by  a  single  bank  cashier  who  had  over- 
come the  "  conservative  "  counsels  of  his  president. 

An  act  of  courage  begun,  inspires  the  mind  with 
more  courage,  even  if  the  consequences  of  it  are  yet 
in  the  future  and  very  doubtful,  especially  when  a 
sense  of  justice  is  at  the  bottom  of  it.  Both  President 
and  Cashier  now  agree  that  it  would  have  been  a 
great  commercial  fault  to  let  the  house  go  down,  and 
their  fears  of  to-morrow  are  measurably  lightened. 

The  Cashier  is  frequently  applied  to  by  the  clerks 
for  instruction  in  disputed  matters,  and  by  dealers 
who  have  real  or  imaginary  causes  of  complaint. 
The  general  book-keeper  reports  several  country 
banks  overdrawn  perhaps  a  hundred  thousand  dollars ; 
whence  he  concludes  there  must  be  a  failure  of  remit- 
tances or  miscarriage  of  letters,  or  special  understand- 
ing with  the  officers.  The  Cashier  has  given  no 
authority  to  overdraw,  and  the  telegraph  is  employed 


DOMESTIC   TKOHBLES.  97 

to  have  the  matter  explained.  It  is  found  that  letters 
are  missing;  and  the  Porter  is  dispatched  to  the 
Post  Office,  where  he  finds  them  just  returned  from 
another  bank  to  which  they  had  been  inadvertently 
delivered. 

"  Mr.  Cashier,  why  can't  I  have  my  collection 
paper  credited  when  it  is  past  due  ?"  says  a  petulant 
dealer,  exhibiting  his  note-book. 

"  You  can,  sir." 

"  Well,  I  don't  get  it !  Here's  a  note  of  twelve 
hundred  dollars  due  at  Mobile  a  week  ago,  and 
another  of  sixteen  hundred  at  Baltimore  which  was 
paid  the  day  before  yesterday ;  and  all  the  satisfaction 
I  can  get  out  of  your  book-keeper  is  that  he  supposes 
they  are  not  heard  from.  I  wish  I  could  be  saved 
this  annoyance  of  having  to  run  to  the  bank  every 
day  to  keep  your  books  straight !" 

"  The  clerk  is  right,  Mr.  Krabb.  We  have  no  ad- 
vice of  the  notes,  but  I  think  we  should  get  it  by 
to-day's  Southern  mail.  Walk  in,  sir.  Here  is  the 
Porter  with  the  letters  now." 

The  Cashier  finds  a  notice  of  protest  in  both  cases, 
which  he  hands  over  to  Mr.  Ea'abb,  who  vents  some 
additional  bitterness  on  banks  generally,  as  if  tliey 
were  responsible  for  his  misfortunes.  It  is  often  ludi- 
crous to  witness  the  manner  in  which  people  of  a 
certain  temper  seem  to  derive  the  greatest  comfort, 
when  their  affairs  go  wrong,  in  "  blowing  up  the 
bank." 

Mr.  Krabb  gives  place  to  a  complainant  whose 
country  checks  have  been  refused  on  deposit  by  the 
Receiving  Teller,  for  which  on  inquiry  the  Cashier 

5 


98  THE   CASHIEE. 

finds  there  was  ample  ground.  Then  follows,  from  a 
profitable  dealer  who  cannot  be  turned  aside,  an 
application  for  a  clerkship  on  behalf  of  a  young  rela- 
tive whose  qualifications  and  even  genealogy  must  be 
stated  at  length,  notwithstanding  the  assurance  that 
there  is  no  vacancy,  and  none  in  prospect.  An  ofiicer 
of  a  distant  corresponding  bank  consumes  an  hour  in 
talking  about  the  details  of  his  account.  A  country 
stockholder  is  disturbed  about  the  misfortunes  of  trade, 
and  "  drops  in  "  to  have  his  fears  quieted ;  another  to 
ask  advice  whether  it  is  not  a  good  time  to  sell  or 
to  purchase  stock.  The  interruptions  are  endless, 
often  for  trifling  cause,  and  often  vexatious.  This  is 
the  common  experience  of  the  Cashier  of  an  active 
city  bank. 

Whilst  the  Cashier  has  been  thus  occupied,  his 
assistant  or  corresponding  clerk  has  prepared  most 
of  the  outgoing  correspondence  for  the  day,  consisting 
of  acknowledgments,  checks  and  notes  to  be  forwarded 
to  other  banks  for  collection,  the  return  of  protested 
paper,  and  other  formal  matters. 

The  Southern  mail  brings  a  new  batch  of  letters 
from  Philadelphia,  Baltimore,  Charleston,  Mobile, 
New  Orleans,  and  elsewhere.  Those  which  require 
his  particular  attention  are  separated  from  the  rest, 
and  he  disposes  of  them  as  he  finds  opportunity. 
During  the  last  hour  before  three  o'clock  he  is  liable 
to  increased  pressure  and  annoyance  from  dealers, 
according  to  the  condition  of  the  market. 

The  banking  business  of  New  York  is  generally 
active  throughout  the  year.     A  short  term  of  relaxa- 


SPECULATIONS.  99 

tion  occurs  in  midsummer,  but  it  bears  no  proportion 
to  the  relaxation  in  trade.  The  period  immediately 
folloM'ing  the  panic  of  1857  was  one  of  unprecedented 
prostration,  and  wholly  exceptional.  For  the  pre- 
vious ten  or  fifteen  years,  there  was  probably  not  more 
than  an  average  of  a  single  month  in  the  year  when  the 
absence  of  either  the  President  or  Cashier  would  not 
have  devolved  an  inconvenient  burden  on  the  other. 

What  has  been  said  of  the  personal  character  and 
influence  of  the  President  is  in  every  way  equally 
applicable  to  the  Cashier.  There  is  perhaps  more 
necessity  on  his  part  for  the  exercise  of  patience  and 
forbearance,  for  the  reason  that  the  dignity  and  public 
estimation  of  the  higher  office  secures  it  against 
many  annoyances  of  the  smaller  accounts. 

To  gain  confidence,  the  bank  officer  must  deserve 
confidence.  He  must  possess  the  real  qualities  of 
character  that  call  it  forth.  Many  of  the  circum- 
stances of  trade  are  of  a  kind  that  tend  to  weaken  and 
corrupt  the  moral  sense.  When  men  are  sorely 
pressed  for  the  want  of  money,  they  find  some  person 
with  whom  to  exchange  notes — commonly  one  in  like 
condition ;  and  thus  a  fictitious  obligation  is  created. 
The  ebb  tides  of  commerce  are  always  floating  down- 
wards men  who,  yesterday,  were  floating  up.  There 
are  solvent  merchants  always  drifting  towards  insol- 
vency. In  their  efforts  to  stem  the  current,  they 
resort  to  every  possible  expedient — to  speculation  in 
land,  or  in  guano  companies — to  gambling  at  the 
Stock  Board,  or  at  the  faro  table.    The  bank  records 


100  THE   CASHIER. 

contain  many  instances  of  men  suddenly  breaking 
down  after  a  long  and  successful  career,  with  scarcely 
a  vestige  of  property  left  unmortgaged.  These  histo- 
ries are  all  freshened  up  in  the  memory  of  the  bank 
officer,  when  the  money-market  becomes  tight  and 
dangerous.  They  excite  his  distrust,  and  he  scru- 
tinizes notes  and  securities,  perhaps  with  undue 
severity,  while  the  needy  applicant  for  money  over- 
rates their  value,  and  strives  to  conceal  the  weak 
points  of  his  business. 

Why  treat  with  such  cases  on  any  terms  ?  "Why 
not  discard  them  at  once  ? — Because  the  parties  are 
already  indebted  to  the  bank,  and  it  is  the  duty  of 
the  ofi&cer  to  extend  indulgence  where  the  debt  may 
be  saved. 

The  Cashier  is  necessarily  in  frequent  contact  with 
the  different  clerks  in  the  bank,  and  a  description  of 
many  current  incidents  of  his  office  will  be  embraced 
in  an  accoifnt  of  their  duties. 

Although  it  is  not  possible  for  him  to  maintain  a 
personal  supervision  of  all  the  books  of  a  bank  in 
detail,  it  is  his  duty  to  keep  them  in  constant  general 
review.  In  the  first  place,  it  is  indispensable  that  he 
should  have  a  perfect  acquaintance  with  the  theory 
of  the  accounts,  so  that  when  his  eye  falls  on  any 
page  he  shall  comprehend  it  immediately,  whether  it 
consists  of  a  mere  record  of  the  notes  lodged  for  col- 
lection, the  postings  of  an  individual  account  in  the 
Ledger,  the  entries  on  the  Paying  Teller's  Cash-book, 
or  anything  else.  One  of  the  principal  peculiarities 
of  bank  accounts  is  the  daily  transfer  of  original 


HIS  KNOWLEDGE  OF  ACCOimTS.  101 

records  by  many  different  persons  to  different  books, 
and  their  final  concentration  in  one  book  wbich  fur- 
nishes the  proof  of  the  whole.  This  includes  many 
long  and  laborious  additions  which  grow  so  rapidly 
into  vast  accumulations  and  various  dependence,  as  to 
defy  the  vigilance  of  any  one  person.  The  Cashier 
cannot  make  the  additions,  but  he  can  in  a  few 
minutes  satisfy  himself  of  the  accuracy  of  transfers  to 
the  general  proof.  He  is  not  expected  to  examine  the 
separate  accounts  of  a  ledger  of  fifteen  hundred  pages, 
but  he  can  in  an  instant  compare  the  footing  of  its 
proof-sheet  with  the  general  ledger.  If  he  wants  to 
test  a  particular  point  in  any  part  of  the  system,  he 
knows  what  books  and  accounts  to  refer  to  without 
the  aid  of  the  clerks  themselves,  and  how  to  ask  them 
for  explanation  if  he  sees  cause  for  it.  To  his  prac- 
ticed eye,  a  single  glance  is  enough  to  inform  him 
whether  a  ledger  is  properly  kept  or  neglected.  He 
can  examine  it  as  rapidly  as  he  can  turn  over  its 
leaves.  The  observation  for  five  minutes,  of  the  man- 
ner in  which  a  clerk  transacts  his  duties,  is  enough  to 
satisfy  him  of  his  competency.  It  may  readily  be 
conceived  that  a  Cashier  so  skilled  shall  exert  a  very 
effectual  supervision  over  a  company  of  clerks  by  his 
mere  presence ;  and  on  the  other  hand,  it  is  apparent 
that  one  who  is  deficient  in  such  knowledge  of 
accounts  may  be  blinded  to  any  extent  of  error  and 
imposition. 

The  Cashier  has  it  in  his  power  to  commit  fraud 
without  limit,  and  to  conceal  it  for  a  time,  in  spite  of 
all  the  vigilance  of  the  President,  clerks,  and  direc- 


102  THE   CASHIER. 

tors.  By  collusion  with  otliers,  and  especially  with 
the  Paying  Teller,  it  is  difficult  to  say  what  he  might 
not  do.  A  case  like  the  following  occurred  within  a 
few  years  in  the  State  of  New  York. 

The  Cashier  of  a  bank  with  a  capital  of  four 
hundred  thousand  dollars  became  interested  in  a  rail- 
road, and  was  appointed  its  treasurer.  In  the  course 
of  the  negotiations  and  disbursements  which  he  car- 
ried on,  the  road  became  indebted  to  the  bank  by 
overdraft.  To  conceal  this  from  the  President,  who 
was  a  stern  disciplinarian  and  a  near  connection  of 
the  Cashier,  the  latter  obtained  credit  from  a  corre- 
sponding bank  by  the  re-discount  of  bills  receivable 
which  had  been  forwarded  to  it  for  collection.  This 
involved  the  necessity  of  falsifying  the  accounts,  so 
that  the  collection  paper  should  appear  as  part  of  the 
assets  of  the  bank,  after  it  had  been  virtually  sold  to 
another  institution.  Thus  was  established  a  thi-ee- 
fold  fraud — first,  by  the  overdraft,  second  by  forgery 
of  records,  third,  by  breach  of  confidence  with  his 
superior  officer.  The  Cashier  had  been  associated 
with  the  President  for  twenty  years,  and  during  that 
time  was  faithful  and  efficient.  The  family  connec- 
tion existing  between  them  served  most  efifectually 
to  aid  him  in  a  system  of  concealment,  which  resulted 
before  discovery  in  the  embezzlement  of  two  hundred 
and  fifty  thousand  dollars. 

As  the  embezzlement  grew,  it  caused  a  correspond- 
ing depression  of  the  discount  line  of  the  bank,  which 
constantly  passed  under  the  eye  of  the  President. 
He  was  deceived  by  a  fictitious  statement  of  bills  dis- 
counted, which  was  kept  up  continuously  as  the  case 


A   FRAUDULENT   OFFICEE.  103 

required.  The  accounts  of  the  bank  witli  its  corre- 
sj)onding  banks  in  other  cities  were  overdrawn ;  post- 
dated certificates  of  deposit  were  issued,  and  being 
illegal,  they  were  kept  in  negotiation  by  outside  con- 
federates, and  in  surreptitious  channels ;  the  unem- 
ployed circulating  notes  of  the  bank  were  secretly 
hypothecated  for  loans ;  the  absorption  of  its  resources 
in  one  direction  necessarily  withdrew  accommodations 
from  the  regular  dealers,  and  the  consequent  decline 
of  deposits  was  concealed  by  the  withholding  of  indi- 
vidual checks  and  by  false  ledger  entries ;  drafts  on 
other  cities  of  which  no  entries  were  made  were  sold, 
and  the  proceeds  abstracted ;  to  provide  against  the 
discovery  of  false  additions  where  a  page  was  likely 
to  be  examined,  the  component  entries  were  falsified, 
and  after  the  examination  was  made,  the  falsifications 
were  erased ;  these,  with  many  other  processes,  were 
kept  up  for  a  year  and  a  half  without  exciting  the 
suspicion  of  the  President.  Five  successive  quarterly 
statements  were  sworn  to,  and  forwarded  to  the  Bank 
Superintendent  at  Albany,  in  which  the  overdrafts 
were  stated,  in  four  of  them  at  less  than  two  thousand 
dollars,  when  they  were  in  fact  from  one  hundred  to 
one  hundred  and  seventy  thousand  dollars,  and  in  the 
fifth  at  ten  thousand,  when  they  exceeded  two  hundred 
thousand  dollars.  The  amount  of  illegal  certificates 
and  post-dated  checks  negotiated  within  the  time 
named,  was  more  than  a  million  of  dollars. 

During  the  entire  period  of  this  systematic  embez- 
zlement, the  President  of  the  bank  assisted  in  the  daily 
management  of  its  afiairs,  and  was  almost  hourly  in 
contact  with  tlie  Cashier  and  the  clerks.     He  was  an 


104  THE   CASHIEE. 

experienced  banker,  both  in  theory  and  practice,  and 
gave  perhaps  more  attention  to  the  details  of  the 
business  than  is  nsual  for  bank  presidents  who  are 
associated  with  active  and  skillful  cashiers.  It  seems 
hardly  credible  that  such  various  and  extensive  frauds 
could  be  carried  on  so  long,  without  the  exposure  of 
some  weak  point.  But  it  is  explained  by  the  collusion 
of  clerks,  and  by  the  completeness  of  the  watch  that 
was  secretly  kept  upon  all  his  movements.  His  daily 
calls  at  the  Post  Office  were  anticipated  by  the  Cashier, 
who  intercepted  all  letters  which  would  excite  sus- 
picion, and  there  were  many  written  to  him  for  this 
express  purpose.  The  Post  Office  clerk  was  bribed 
to  withhold  any  that  might  come  at  an  unusual  time. 
In  fact,  the  President  was  dogged  and  blinded  at 
every  step  and  hour  of  his  existence,  as  any  other 
man  would  have  been  in  the  same  position.  Any 
ordinary  fraud  would  have  transj^ired  through  an 
honest  clerk,  but  the  clerk  was  not  honest.  "No  ave- 
nue was  left  open  by  which  suspicion  could  enter. 

Such  an  extraordinary  case  as  this  is  not  necessary 
to  prove  to  an  experienced  banker,  the  utter  impos- 
sibility of  preventing  fraud  by  any  combination  of 
sagacity,  watchfulness,  and  supervision.  There  is 
perhaps  no  record  of  a  bank  fraud  extant  of  which 
the  perpetrator  was  not  honest  yesterday.  The  man 
who  has  been  faithful  for  twenty  years  is  faithless  on 
the  next  day.    What  is  to  prevent  it  ? 


THE   PAYING   TELLER.  105 


CHAPTER   lY. 

THE     PAYING     TELLER. 

The  Paying  Teller  of  a  bank  stands  at  the  head 
of  the  clerks'  department,  and  next  in  the  usual  order 
of  promotion  to  the  Cashier.  He  is  frequently  called 
also,  the  First  Teller. 

His  duty,  as  signified  by  his  title,  is  to  pay  out 
money.  ISTo  other  clerk — not  even  the  President  or 
Cashier — interferes  with  this  function. 

The  nature  of  the  banking  business  calls  for  direct 
individual  responsibility  in  the  clerk.  Money  occu- 
pies but  little  space  and  is  easily  abstracted.  The 
opportunities  of  fraud  are  frequent  and  beyond  the 
reach  of  vigilance.  Each  clerk  is  therefore  required 
to  give  bonds  for  his  integrity  ;  and  it  is  necessary  in 
the  division  of  labor  to  assign  specific  duties,  that  one 
may  not  be  liable  to  suffer  for  the  default  of  another. 

The  Paying  Teller  gives  bonds,  according  to  the 
magnitude  of  the  trust  confided  to  him,  to  the  extent 
of  ten  or  twenty  thousand  dollars.  The  latter  sum  is  the 
highest  required  by  any  of  our  city  banks.  It  is  usual 
to  divide  this  betw^een  several  persons,  the  guarantee 
being  considered  stronger  in  a  moral  point  of  view  ; 
and  in  case  of  default  by  the  Teller  it  is  redeemable 
with  less  hardship  than  it  would  be  if  the  entire 
obligation  rested  on  one.     The  bondsmen  must  be 

5* 


106  THE   PAYmG   TELLEB. 

men  of  established  character  and  pecuniary  ability. 
Their  names  are  submitted  to  the  Board  of  Directors, 
or  to  a  committee  of  which  the  President  is  mostly 
chairman.  If  they  are  not  satisfactory,  the  Teller 
must  procure  others. 

A  Director  is  not  allowed  to  be  bondsman  for  a 
clerk  in  the  same  bank,  nor  one  officer  for  another,  as 
such  an  obligation  might  be  used  to  obtain  an  undue 
influence  over  the  favored  person.  A  book-keeper 
might  hesitate  to  expose  irregularities  in  the  account 
of  a  director  to  whom  he  was  partially  indebted  for 
his  salary. 

The  use  of  bonds  as  a  guarantee  of  integrity  has 
been  questioned,  because  they  will  not  be  violated  by 
honest,  nor  respected  by  dishonest  men ;  and  they 
are  apt  to  be  regarded  as  formal  instruments,  merely 
to  answer  a  by-law  or  to  maintain  an  old  custom. 
Tliere  are,  however,  indications  in  their  requirement 
which  could  not  safely  be  dis2:)ensed  with.  The 
ability  of  a  person  to  find  security  for  so  large  a  sum 
as  twenty  thousand  dollars,  is  a  strong  proof  of  his 
good  repute,  which  is  further  attested  by  the  charac- 
ter of  the  guarantors.  They  are  his  commercial  god- 
fathers. They  cannot  be  banished  from  his  memory 
when  temptation  knocks  at  the  elbow.  They  must 
frequently  cross  his  footsteps  on  his  first  wanderings 
from  the  path  of  rectitude. 

The  most  responsible  and  critical  service  in  the 
bank  is  that  which  embraces  the  custody  and  dis- 
bursement of  its  funds.  This  is  assigned  to  the  Pay- 
ing Teller.  There  is  some  incidental  exception  in  the 
custody,  to  be  hereafter  noticed. 


CONTKOL   OF  THE   VAULT   KEY.  107 

The  amount  of  money  in  his  keeping  may  be  sev- 
eral millions  of  dollars,  consisting  of  coin,  bullion, 
bank  bills,  stocks,  bonds,  and  other  documents.  There 
are  generally  three  or  four  apartments  in  the  vault,  of 
which  one  is  aj^propriated  to  his  exclusive  use.  He 
holds  the  key,  locks  and  unlocks  it  in  person,  goes  to 
it  during  business  hours  at  discretion,  unattended, 
and  is  the  sole  trustee  of  its  contents.  He  is  jealous 
of  the  charge,  and  shares  it  with  nobody.  He  is  sen- 
sible that  the  key  of  his  vault  is  also  the  key  of  his 
character,  and  he  will  not  give  it  to  the  keeping  of 
another  for  an  instant — ^not  even  to  the  President  or 
Cashier,  without  satisfactory  explanation.  If  they 
should  officially  require  him  to  surrender  it,  distrust 
would  be  implied,  or  perhaps  dismissal  from  office. 

On  the  other  hand,  there  are  possible  circumstances 
under  which  a  Teller,  conscious  of  his  own  rectitude, 
would  refuse  to  deliver  his  key  even  to  his  superior 
officers.  The  terms  of  his  bond  make  him  contin- 
gently independent  of  them.  A  suspicion  that  they 
were  in  collusion  for  dishonest  purposes  would  not  only 
justify  such  refusal,  but  make  it  an  imperative  duty. 
Besides,  his  bondsmen  have  legal  rights  in  the  pre- 
mises which  might  be  compromised  by  allowing  the 
custody  of  his  vault  to  pass  into  other  hands.  His 
own  rights  also,  and  his  character,  might  be  involved 
by  the  unconditional  surrender  of  his  key  on  any 
demand. 

Again,  if  the  Paying  Teller,  without  obvious  cause, 
such  as  sickness  or  necessary  absence,  should  tender 
the  custody  of  his  key  for  a  single  night  to  the  Presi- 
dent or   Cashier,  or  to  another   clerk,  it  would  be 


108  THE  PAYING  TELLEK. 

declined.  The  tender  might  be  made  for  the  express 
purpose  of  creating  a  divided  or  doubtful  responsi- 
bility for  a  default. 

The  statement  of  these  details  is  necessary  to 
show  the  exact  relation  of  the  Paying  Teller  to  his 
trust.  There  is  no  apj^arent  obstacle  to  his  abuse  of 
it,  nor  are  the  means  of  detection  so  immediate  as  to 
prevent  escape.  Neither  would  his  arrest  necessarily 
insure  the  recovery  of  money  abstracted,  which 
might  greatly  exceed  the  amount  of  his  bonds.  His 
position  is  more  vulnerable  than  any. other  in  the 
bank.  It  is  the  only  one  that  is  out  of  the  reach  of 
daily  observation  by  other  clerks,  and  in  which  fraud 
may  be  practiced  without  collusion  or  risk  of  imme- 
diate discovery.  ISTor  does  it  seem  possible  to  devise 
any  method  of  supervision  to  prevent  abuse,  or  ade- 
quate indemnity  to  cover  it. 

This  close  custody  of  the  vault  does  not,  however, 
limit  the  right  of  the  officers  to  enforce  the  most  rigid 
examination  of  its  contents.  They  may  require  him, 
in  their  presence,  to  weigh  every  bag  of  gold,  count 
the  silver  and  bank  bills,  and  test  the  accuracy 
thereof  by  his  books,  to  their  full  satisfaction.  Or 
they  may  call  in  the  aid  of  other  clerks  to  perform 
this  service.  It  is  impossible  that  he  should  know  at 
what  time  the  officers,  or  a  committee  of  the  direc- 
tors, may  wait  on  him  to  make  the  examination.  His 
accounts  must  therefore  be  kept  in  such  order  as  to 
stand  the  test. 

The  necessary  qualifications  of  a  clerk  in  this  post 
can  be  better  understood  by  following  him  thi'ough 
his  daily  routine,  than  by  any  other  mode  of  descrip- 
tion. 


KOTTTESrE.  109 

The  plan  of  his  accounts  is  entirely  simple.  He 
has  a  certain  amount  of  cash  on  hand  from  which  to 
pay  checks.  The  amount  of  the  latter  subtracted 
from  the  former  must  agree  with  the  remaining 
balance.  The  only  modification  of  this  process  is  the 
debit  and  credit  of  the  exchanges  through  the  Clear- 
ing House. 

The  Paying  Teller  reaches  the  bank  about  nine 
o'clock-  in  the  morning.  He  unlocks  his  vault  in  per- 
son, and  the  Porter  assists  in  carrying  to  his  desk  the 
trunks  and  trays  containing  as  much  money  in  bank 
bills  and  coin  as  he  will  be  likely  to  want  during  the 
day.  He  locks  the  vault,  and  retains  the  key  in  his 
personal  care. 

The  bills  of  the  issuing  banks  are  technically  dis- 
tinguished from  those  of  other  banks  by  the  name  of 
"  Office  Notes."  The  money-drawer  is  divided  into 
boxes,  in  which  the  difierent  denominations  are  dis- 
tributed. To  facilitate  payments,  the  smaller  denom- 
inations are  usually  kept  counted  in  packets  of  fifty 
bills  each.  A  packet  of  fives  contains  two  hundred  and 
fifty  dollars ;  a  packet  of  tens,  five  hundred  dollars, 
and  a  packet  of  twenties,  one  thousand  dollars.  The 
bills  below  five  (consisting  of  threes,  twos,  and  ones) 
are  generally  kept  in  packets  of  fifty  dollars  gross, 
and  mixed  together  for  the  convenience  of  dealers. 
A  check  for  the  precise  amount  of  any  of  these 
packets,  is  paid  in  an  instant  without  recounting  the 
bills.  For  intermediate  amounts  the  packets  are 
opened,  and  they  must  of  course  be  recounted. 

The  theory  of  the  bank  accounts  requires  that  all 


110  THE   PAYING   TELLER. 

payments  of  money  must  be  made  by  one  Teller.  The 
result  is,  that  all  money  received  must  appear  on  his 
books.*  The  Exchange,  sent  to  the  Clearing  House 
is  money  paid  out,  and  it  must  therefore  pass  through 
the  accounts  of  the  Paying  Teller.  The  particular 
description  of  this  exchange  comes  appropriately 
under  the  head  of  the  receiving  dejyartment  of  the 
bank,  where  it  originates.  It  is  sufficient  here  to  state, 
that  it  is  composed  of  the  checks  and  bills  on  other 
banks  taken  in  deposit,  and  each  day  sent,  in  for 
redemption  at  the  Clearing  House  counter.  It  is 
officially  delivered  in  a  prepared  state  to  the  Paying 
Teller  by  the  Keceiving  Tellers,  on  each  morning  fol- 
lowing its  receipt.  The  former  takes  cognizance  of 
it  only  in  the  aggregate,  responsibility  for  its  accu- 
racy in  detail  resting  on  those  by  whom  it  is  pre- 
pared. 

To  dispatcli  this  Exchange  to  the  Clearing  House 
is  the  first  duty  of  the  Paying  Teller  every  morning. 
This  is  generally  done  by  half  past  nine  o'clock ;  and 
at  ten  precisely,  the  Teller  opens  his  little  gate  in  the 
counter  railing,  and  is  ready  for  the  current  business 
of  the  day. 

The  payment  of  checks  begins  immediately.  A 
stranger  presents  one  for  five  hundred  dollars,  with  a 
request  for  certain  denominations  of  bills.  He  wants 
"  two  hundred  dollars  in  twenties,  one  hundred  and 
fifty  in  fives,  and  the  balance  in  ones,  twos,  and 
threes." 


*  There  is  an  accidental  modification  of  this  role,  wliich  will  be  found  explained 
elsewhere. 


ROUTINE.  Ill 

Here  is  a  requirement  for  rapidity  and  accuracy 
quite  above  mediocrity.  The  Teller  must  pass 
through  his  hands  forty  single  bank  bills  and  three 
packets. 

Another  applicant  wants  "  five  hundred  dollars  in 
twenties,  two  hundred  in  tens,  one  hundred  and  fifty 
in  fives,  and  forty  in  smaller  bills."  This  will  require 
the  counting  of  more  than  one  hundred  bank  notes. 

These  are  the  simplest  transactions  of  the  desk ;  yet, 
following  rapidly  in  succession,  they  call  for  presence 
of  mind,  precise  tact,  and  no  common  skill  in  mental 
arithmetic. 

The  debit  Exchange  from  the  Clearing  House  is 
brought  in  by  the  Porter  about  half  past  ten  o'clock  ; 
and  although  the  chief  labor  of  its  examination 
devolves  on  an  assistant,  the  Paying  Teller  will  not 
pass  it  into  his  accounts  until  satisfied  by  personal 
revision  that  it  is  correct.  It  amounts  frequently  to 
a  million  of  dollars  or  more,*  consisting  mostly  of  the 
checks  of  dealers.  The  signature,  indorsement,  and 
other  peculiarities  of  each,  must  be  scrutinized  before 
it  is  charged  to  the  drawer.  This  examination  is  pro- 
tracted from  one  to  two  hours,  subject  to  the  current 
accidents  of  the  business.  It  is  dropped  on  the  in- 
stant, remitted  for  two  or  five  minutes,  resumed,  im- 
mediately dropped  again,  and  again  resumed,  with 
constant  interruptions. 

Some  of  the  large  banks  have  made  the  receipt  and 
examination   of  the   Clearing  House  Exchange  the 

*  In  some  of  the  larger  banks,  more  than  two  millions 


112  THE   PAYING   TELLEK. 

work  of  a  separate  department,  as  a  better  guarantee 
against  mistakes. 

"Will  you  certify  that,  sir?"  It  is  a  check  for 
thirty  thousand  dollars,  drawn  by  Slater  &  Co.  Tliey 
have  not  half  that  sum  on  deposit  in  the  bank,  but 
usage  justiiies  the  certification  on  certain  terms,  of 
which  the  Teller  takes  instant  cognizance  from  mem- 
ory. These  relate  to  the  capital,  manner  of  business, 
character  of  the  men,  and  other  circumstances  which 
may  make  it  safe  for  the  bank  to  pay  checks  in  ad- 
vance of  the  deposit. 

"Are  Slater  and  Co.  sufficiently  reliable  to  justify 
my  loaning  them  thirty  thousand  dollars  without 
special  security?  May  I  trust  their  ability  and  honor 
to  restore  their  account  before  three  o'clock  ?" 

This  is  one  of  the  most  interesting  and  critical 
emergencies  of  the  Paying  Teller's  desk.  If  he  should 
refuse  the  certification,  the  credit  of  Slater  &  Co. 
would  be  shocked  as  with  an  electric  discharge.  Even 
if  he  holds  it  in  suspense  an  instant,  as  though  a  doubt 
troubled  his  mind,  the  doubt  is  communicated  to  the 
owner  of  the  check  and  is  reflected  against  the  draw- 
ers. He  certifies  it  without  hesitation.  This  is  the 
best  possible  proof  of  the  high  standing  of  a  dealer 
with  his  bank. 

The  discretion  of  the  Teller  in  certifying  checks  is 
for  the  most  part  independent  of  the  superior  officers, 
and  they  are  averse  to  interfering  with  it.  In  doubt- 
ful cases,  he  refers  to  them  for  special  instruction. 
Dealers  apply  to  them  also  to  reverse  his  judgment, 
though  not  often  with  success.  Either  of  them  would 
be  likely  to  answer — "  the  Teller  understands  his  busi- 


EOTJTINE.  113 

ness  better  than  I  do."  Such  is  the  influence  ac- 
quired by  a  competent  and  judicious  clerk  in  this 
post,  that  he  obtains  a  degree  of  respect  from  the 
customers  of  the  bank  little  less  than  is  accorded  to 
the  President  or  Cashier. 

The  Paying  Teller  alone  is  authorized  to  certify 
checks.  His  name  written  across  them,  ordinarily  on 
the  face,  pledges  the  bank  to  pay  them  when  subse- 
quently returned  through  the  exchanges  or  otherwise, 
if  the  indorsements  are  correct.  Any  city  bank  will 
receive  on  deposit  certified  checks  on  other  banks  in 
good  standing,  without  reference  to  the  drawers,  and 
pay  out  its  own  bills,  or  gold,  for  drafts  against  such 
deposits. 

Under  the  old  special  charters,  our  banks  were 
allowed  to  issue  currency  to  twice  the  amount  of 
their  capital  stock,  and  bills  of  the  higher  denomina- 
tions of  one,  five,  and  ten  thousand  dollars  were  in 
common  use.  Checks  were  then  mostly  paid  in  bank 
bills,  and  certification  was  rather  exceptional.  But 
since  the  enactment  of  the  General  Banking  Law  in 
183S,  the  old  charters  have  gradually  expired,  and 
their  circulation  has  been  withdrawn.  There  is  no 
fact  that  better  indicates  the  improved  character  of 
our  banking  system,  than  its  diminished  paper  issues. 
Tlie  old  laws  would  give  to  our  present  city  capital 
an  issue  of  more  than  one  hundred  and  twenty  millions 
of  dollars,  whereas  we  have  now  (in  1858)  less  than 
the  one-tenth  part  of  this  sum  registered,  and  less 
than  the  one-fifteenth  part  in  actual  circulation.  The 
result  of  this  decrease  of  bank  currency  is  that  busi- 


114  THE   PAYING   TELLER. 

ness  is  transacted  mostly  by  checks.  In  an  average 
market  the  daily  exchanges  of  the  Clearing  House 
alone  are  near  twenty-five  millions  of  dollars,  and  our 
entire  city  circulation  is  but  seven  millions,  which  is 
principally  absorbed  in  the  retail  trade.  The  amount 
of  bank  bills  redeemed  daily  through  the  exchanges 
does  not  average  over  two  or  three  hundred  thousand 
dollars ;  the  balance  consists  of  the  checks  of  indi- 
viduals, and  of  bank  checks  on  each  other. 

Certified  checks  are  mostly  returned  in  the  debit 
exchange  of  the  following  day,  through  the  Clearing 
House.  They  are  used  either  for  deposit,  or  to  j)ay 
notes  in  other  banks  than  that  on  which  they  are 
drawn.  Being  of  nearly  equal  credibiUty  with  bank 
drafts,  they  are  used  also  in  remittance  to  distant 
parts  of  the  country,  in  which  case  they  do  not  appear 
for  redemption  for  several  days.  They  are,  however, 
charged  to  the  drawers  immediately,  certification 
being  equivalent  to  payment.  The  Paying  Teller's 
record  of  certified  checks  is  a  fac  simile  of  the 
Receiving  Teller's  deposit  book  in  its  rulings,  exten- 
sion columns,  postings,  and  method  of  proof — the  one 
being  a  credit^  and  the  other  a  dehit  entry  to  the 
dealer.     See  example  on  page  115. 

Tliis  manner  of  posting  certifications  is  of  recent 
origin.  The  certification  check  list  is  a  new  book 
not  yet  generally  adopted  in  our  city  banks.  The 
aggregate  is  posted  to  Certification  Account^  which 
balances  the  separate  charges  to  individuals.  When 
the  checks  are  finally  redeemed,  they  are  carried  to 
the  debit  of  this  account,  which  thus  always  shows 
the  balance  of  certified  checks  remaining  out.    This, 


CERTIFICATION  OF  CHECKS. 


115 


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116  THE  PAYING   TELLER. 

or  some  equivalent  plan,  is  indispensable  to  prevent 
fraud  or  error  by  tlie  duplication  of  checks.  On  the 
old  plan,  the  dealer's  ledger  account  was  not  actually 
charged  with  certified  checks  until  they  were  re- 
turned. They  might  be  in  transit  long  enough  for 
the  memory  of  the  Teller  and  the  Book-keeper  to 
become  dim,  or  for  other  transactions  to  throw  them 
out  of  sight.  A  pencil  memorandum  on  the  Ledger 
(a  usual  method  of  noting  them)  might  easily  be 
eflfaced  by  accident  or  design.  In  fact,  it  was  such 
abuse  and  accident  that  led  to  the  adoption  of  the  pre- 
sent plan  of  posting  certifications. 

The  Teller  has  resumed  the  examination  of  the 
Exchange  checks,  after  certifying  that  of  Slater  &  Co. 
Those  which  are  defective,  or  of  doubtful  character  in 
any  respect,  are  laid  aside  for  more  particular  inspec- 
tion ;  the  immediate  pressure  being  to  charge  the 
mass  of  them  to  their  respective  accounts  in  the 
Ledger ;  for  these  are  liable  to  be  drawn  against  con- 
tinuously, and  it  is  important  to  know  their  actual 
condition. 

Meanwhile,  the  current  transactions  of  the  business 
are  going  on.  The  presentation  of  checks  at  the 
counter  is  more  frequent  as  the  day  advances,  and 
some  require  correction  or  explanation.  One  is  not 
indorsed,  or  improperly  indorsed.  Another  is  post- 
dated. The  date  of  another  has  been  altered,  and  the 
Teller  must  be  satisfied  whether^  honestly  or  not. 
Another  is  drawn  against  an  uncertain  account,  and 
is  referred  to  the  Book-keeper  to  be  assured  coiTect 
before  payment.    These  various  accidents  are  modi- 


ALTERED   DATES.  117 

fied  by  the  disposition  of  the  holder  of  the  check.  A 
crabbed  customer  will  block  access  to  the  Teller's 
gate,  contesting  his  right  to  be  paid  in  spite  of  inform- 
alities, until  six  or  ten  new  comers  crowd  behind  him 
and  become  impatient  of  delay.  Being  unacquainted 
with  the  exact  liabilities  of  a  bank,  and  the  various 
tricks  attempted  on  the  Teller,  they  often  regard  his 
precautions  as  mere  "  stickling  "  at  trifles. 

Of  what  consequence  is  it  if  a  check  drawn  to  the 
order  of  John  C.  Brown  is  indorsed  John  Brown? 
The  consequence  might  be  the  repudiation  of  the  pay- 
ment by  the  dealer,  and  loss  of  the  whole  amount  by 
the  bank.  Tliere  is  as  much  difference  between  these 
two  names,  legally  and  in  bank  usage,  as  between  the 
names  of  John  C.  Brown  and  Abel  Dodge.  Yet,  if 
the  Teller  knows  that  John  Brown  is  the  man  to 
whom  the  money  was  designed  to  be  paid  by  the 
drawer,  he  might  pass  over  so  slight  a  discrepancy  as 
the  omission  of  the  letter  C.  And  the  drawer  could 
not  then  avail  himself  of  such  discrepancy  to  dispute 
the  rightfulness  of  the  payment. 

Of  what  consequence  is  it  if  a  post-date  is  altered 
to  an  anterior  date  ?  It  does  not  make  the  signature 
less  genuine,  nor  does  the  dealer  pay  more  than  he 
has  promised ! 

No.  But  a  check  paid  before  due  is  not  chargeable 
to  the  dealer  until  the  true  date  transpires.  He 
might  withdraw  his  balance  meanwhile,  and  fail  to 
provide  for  it  subsequently,  thus  throwing  the  loss  on 
the  bank.  It  is  therefore  hazardous  to  admit  of  dates 
that  have  undergone  any  apparent  alteration. 

The  post-dating  of  checks  is  regarded  by  bank  offi- 


118  THE   PAYING   TELLEE. 

cers  as  a  commercial  misdemeanor.  A  dealer  who 
persists  in  the  practice  after  being  warned  of  its  im- 
propriety, would  lose  credit,  and  probably  receive 
notice  to  withdraw  his  account. 

There  are  ordinarily  some  checks  in  the  Exchange 
that  are  rejected  for  want  of  funds,  or  other  cause. 
These  are  returned  to  the  sending  banks  by  a  messen- 
ger, who  brings  back  to  the  Teller  the  bank  bills  or 
coin.  The  bank  returning  them  has  a  right  to  de- 
mand gold,  since  it  has  paid  gold  for  them  in  the 
Clearing  House  settlement. 

Unfortunately,  the  same  condition  of  the  market 
that  makes  it  difficult  for  the  banks  to  maintain  a 
creditable  average  of  specie  for  the  weekly  state- 
ment, is  fruitful  in  overdrafts  ;  and  the  reclamations  in 
gold  are  sometimes  large — reaching  many  thousand 
dollars. 

All  the  checks  that  pass  the  Teller's  examination 
are  given  to  a  clerk  for  entry  on  his  Check  List, 
whence  they  are  charged  to  their  respective  accounts 
in  the  Ledger.  The  bank  bills,  and  the  amount 
received  for  reclamations,  go  into  his  general  cash. 
The  Clearing  House  Exchange  is  then  wholly  incor- 
porated in  his  accounts. 

THE   PAYMENT   OF   CHECKS. 

Tliere  are  three  facts  of  which  the  Teller  must  take 
special  cognizance  in  the  payment  of  checks.  J^irst, 
Is  the  signature  genuine  ?  /Second,  Is  the  account  of 
the  drawer  good  ?    Third,  Is  the  person  whd  presents 


CARELESS   HABITS   OF  MERCHANTS.  119 

tlie  check  entitled  to  receive  the  money.  Generally, 
the  last  occurs  only  when  indorsements  are  to  be  veri- 
fied ;  although  an  accomplished  Teller  never  loses 
sight  of  it,  even  when  checks  are  drawn  payable  to 
the  bearer.  Forged  checks  are  almost  uniformly  so 
drawn. 

There  are  many  points  of  exposure  under  each  of 
the  three  heads  named.     First,  of  the  signature  : 

The  tricks  of  forgery  are  so  ingenious  as  to  consti- 
tute a  standing  terror  to  banks  ;  and  so  loose  are  the 
habits  of  many  merchants  in  the  custody  and  writing 
of  checks,  that  the  temptation  to  try  experiments  in 
this  direction  is  frequently  presented. 

Check-books  are  left  open  on  the  desk  within  sight 
of  casual  and  unknown  visitors.  They  might  be 
abstracted  for  half  an  hour — long  enough  to  give 
the  forger  some  of  the  most  material  points  of  suc- 
cess :  the  style  of  writing,  the  color  of  the  ink,  the 
number  next,  or  near  in  order,  and  above  all,  a 
leaf  of  blank  checks  with  the  name  of  the  merchant 
engraved  on  the  end. 

"There's  no  danger  in  our  ofiice.  Somebody  is 
always  there.  Our  name  was  never  forged  yet. 
And  besides,  if  it  should  be,  the  loss  won't  be  ours. 
That's  the  bank's  look-out." 

The  last  suggestion  is  probably  not  the  least 
influential.  If  the  Teller  pays  a  forged  check,  the 
bank,  and  not  the  merchant,  is  the  loser.  And  so 
a  careless  security  on  the  part  of  dealers  opens  the 
door  and  invites  the  forger  to  come  in. 

Instead  of  allowing  his  check-book  to  be  as  public 
as  a  newspaper,  the  merchant  should  guard  it  with 


120  THE  PAYING   TELLER. 

the  same  care  that  he  does  his  cash-box  or  his  bills 
receivable. 

The  Signature-Book  contains  the  autograph  sig- 
nature of  every  dealer  in  the  bank,  in  alphabetical 
order,  so  that  the  Teller  may  compare  a  suspicious 
signature  with  the  original — an  hourly  necessity,  in 
consequence  of  the  dissimilarity  of  writing  by  the 
same  hand  at  different  times.  The  first  thing  required 
of  a  new  customer  is,  to  write  his  name  and  residence 
in  this  book ;  and  if  a  stranger,  the  name  of  the  per- 
son by  whom  he  is  introduced.  The  signature  of  a 
firm  is  written  by  each  member,  with  his  individual 
name  opposite.  The  names  of  foreign  correspondents 
are  often  cut  from  letters  and  pasted  on  the  page. 

There  is  nothing  in  bank  history  more  remarkable 
than  the  unfrequent  and  comparatively  trifling  loss 
by  forged  signatures.  It  would  seem  almost  miracu- 
lous to  a  spectator  standing  by  the  counter  of  one  of 
our  active  city  banks,  to  witness  the  rapidity  with 
which  the  Teller  pays  checks  (often  at  the  rate  of 
three  in  a  minute),  whilst  at  the  same  time  he  is  sub- 
ject to  perpetual  interruptions  from  within  and  with- 
out. At  the  end  of  the  day,  he  has  paid  from  four  to 
six  hundred  checks  amounting  to  more  than  a  million 
of  dollars — a  large  proportion  to  strangers.  In  the 
fifty-three  city  banks,  during  the  same  six  hours, 
there  have  been  paid  from  fifteen  to  twenty  thousand 
checks,  covering  thirty  millions  of  dollars — and  not 
one  forged  signature !  The  records  of  the  Clearing 
House  show  that  the  amount  of  payments  for  a  year 
through  that  channel  has  reached  the  prodigious 
aggregate    of   seven    thousand  millions  of   dollars. 


FORGERS   DEFEATED.  121 

Another  large  amount,  not  represented  in  the  ex- 
changes, is  paid  over  the  counters — making  a  grand 
total  of  probably  eight  thousand  millions  in  three 
hundred  days ;  and  yet  it  is  seldom  that  the  commu- 
nity is  startled  by  an  announcement  that  a  forged 
check  of  any  imj)ortance  has  slipped  through  the 
hands  of  the  paying  Teller  in  our  city  banks ! 

It  is  doubtless  to  the  terrors  of  the  law,  partly,  that 
banks  are  indebted  for  this  fortunate  immunity.  But 
these  are  operative  mostly  on  a  single  instant  of  time 
— when  the  check  is  presented.  That  passed,  the 
forger  is  comparatively  safe.  He  may  set  rewards 
and  telegraphs  at  defiance.  It  is,  therefore,  the  skill 
and  discernment  of  the  Teller,  first  and  last,  that  keeps 
the  forger  at  a  respectful  distance — skill,  not  only  in 
detecting  false  signatures,  but  in  reading  men  at  sight 
by  the  most  obscure  of  all  characters  written  ujDon 
the  manner,  and  covered  by  practiced  dissemblance, 
more  quickly  than  you  would  read  Roman  capitals. 
The  value  to  the  bank  of  this  detective  faculty  can 
hardly  be  exaggerated. 

Again,  the  forger  seldom  appears  in  person  at  the 
counter.  He  employs,  to  draw  the  money,  an  inno- 
cent agent,  who  will  exhibit  none  of  the  signs  of  con- 
scious guilt.  The  teller  is  alive  to  this  hazard,  and 
questions  strangers  in  such  a  manner  as  to  dispel  or 
confirm  his  apprehensions. 

"  Do  you  wish  to  pay  this  money  out  for  wages  in 
the  city?"     Or, 

"  Is  this  for  your  own  use  sir?" 

"  No,  sir ;  I  am  drawing  it  for  another." 

"Who?" 

6 


122  THE   PAYING    TELLER. 

"  For  a  stranger,  who  requested  it  ?" 

"  Where  is  the  stranger  ?" 

The  answer  would  make  it  clear  whether  there  is 
ground  for  suspicion.  An  innocent  person  would 
answer  promptly,  and  betray  no  symptoms  of  fear. 
The  forger  or  an  accomplice  would  fly  at  once. 

The  time  chosen  by  the  forger  to  present  checks  is 
generally  between  two  and  three  o'clock,  when  the 
counter  is  crowded  by  applicants,  and  the  Teller  is 
obliged  to  pay  as  quickly  as  possible.  He  has  a 
choice  of  days  also,  preferring  Saturday  or  the  day 
before  holidays,  when  the  business  of  two  or  more 
days  is  crowded  into  one.  On  these  "  double  days  " 
the  vigilance  of  the  Teller  is  particularly  roused,  and 
it  is  not  unusual  for  the  President  or  Cashier  to  give 
him  a  passing  admonition  to  "  look  out  for  forged 
checks." 

The  researches  of  the  forger  have  been  carried  so 
far  as  to  discover  that  the  fourth  of  tliB  month,  and 
especially  of  certain  mouths,  as  of  March,  October, 
and  November,  is  what  bankers  call  "  a  heavy  day," 
and  is  more  favorable  for  his  tricks  than  most  others. 

Confidential  marks  independent  of  the  signature 
have  sometimes  been  agreed  upon  between  the  mer- 
chant and  the  Teller,  as  a  further  aid  to  tlie  latter  in 
distinguishing  the  genuineness  of  checks — such  as  a 
pin  hole  in  a  certain  letter,  or  the  omission  of  a  usual 
feature  in  writing ;  but  these  distract  attention  from 
the  more  essential  points  to  be  guarded,  and  if  dis- 
covered by  the  forger,  would  greatly  improve  his 
chances  of  success.  One  of  his  first  steps  is,  to  obtain 
a  genuine  check,  and  subject  it  to  microscopic  exam- 


INGENIOUS  FOEGEEY  DETECTED.         123 

ination.  The  following  instance,  which  came  under 
the  immediate  notice  of  the  writer,  shows  how  inge- 
niously this  is  sometimes  done. 

A  stranger  made  a  small  purchase  at  a  produce 
store  after  the  banks  were  closed  for  the  day,  and 
tendered  in  payment  a  genuine  bill  of  one  hundred 
dollars.  Tlie  merchant  having  deposited  all  his 
money,  could  not  return  the  ditference,  which  was 
over  ninety  dollars.  Neither  could  he  get  the  bill 
changed  by  his  neighbors.  The  stranger,  seeing  the 
difficulty,  said  carelessly  : 

"  No  matter,  sir,  about  bank  bills.  Give  me  your 
check  for  the  difference. 

It  was  given  without  hesitation. 

On  the  following  morning,  it  was  paid  at  the  coun- 
ter of  the  bank  ;  and  immediately  after,  another  check 
for  six  hundred  dollars  with  the  same  signature  was 
presented  by  a  boy.  There  were  no  appearances  of 
irregularity  in  the  latter,  but- the  intuitive  precaution 
of  the  Teller  against  fraud  suggested  the  question, 
suddenly  and  sharply  spoken  : 

"  "Where  did  you  get  this  ?" 

"  A  man  gave  it  to  me." 

"Whatman?" 

"  At  the  corner." 

The  boy  took  instant  alarm,  and  escaped  before  the 
Porter  could  be  called  to  intercept  him. 

The  check  was  a  forgery.  It  had  been  traced  over 
glass  from  the  genuine  signature,  as  became  evident 
when  the  two  were  applied  together. 

Unsuspecting  boys  are  sometimes  induced  by  the 
promise  of  a  dollar  or  two  to  present  a  forged  check, 


124  THE   PAYING   TELLER. 

while  the  rogue  lies  in  waiting.  In  such  a  case,  the 
money  has  not  unfrequently  been  paid,  the  boy  fol- 
lowed, and  his  employer  arrested  in  the  act  of  receiv- 
ing it. 

The  forger  works  in  the  dark.  He  has  ample  time 
to  prepare  every  circumstance  that  can  favor  his 
purpose,  and  to  study  all  the  contingencies  of  failure. 

The  following  case  shows  how  one  bank  may  be 
used  to  facilitate  fraud  on  another.  It  will  also 
enforce  what  has  been  said  on  the  proper  care  of 
checks. 

A  leaf  of  blank  forms  was  stolen  from  the  check- 
book of  a  wealthy  merchant  who  was  a  director  in 
one  of  our  city  banks.  A  small  business  transaction 
was  then  contrived  by  which  a  full  genuine  check 
was  obtained. 

The  forger  might  now  practice  on  the  signature  at 
pleasure.  "When  satisfied  that  he  could  produce  a/^c 
simile  check,  he  filled  up  one  of  the  stolen  forms  with 
an  odd  sum  under  three  thousand  dollars,  and  presented 
it  at  the  bank.  To  avoid  suspicion,  that  might  be 
excited  by  so  large  a  check  if  drawn  payable  to  the 
bearer,  he  made  it  payable  to  his  own  order  in  an 
assumed  name,  and  requested  the  Teller  to  certify  it, 
saying,  that  the  indorsement  would  be  guaranteed  by 
the  bank  in  which  he  intended  to  deposit  it.  The 
deliberation  and  coolness  with  which  he  referred  to 
the  manner  of  satisfying  the  rule  of  the  bank  with 
respect  to  indorsements,  and  his  possession  of  the 
auxiliary  points  of  number,  apparent  consecutiveness 
with  previous  checks,  and  especially  the  check  itself 
with  the  name  of  the  merchant  engraved  on  the  end, 


LOSSES   NEVER   DISCOVERED.  125 

procured  liim  the  genuine  certification  of  the  Teller 
without  suspicion. 

He  then  opened  an  account  in  another  city  bank, 
using  the  name  of  a  well-known  Cashier  in  Albany  as 
introductory  to  the  officers,  and  exhibiting  the  check, 
the  certification  of  which  vouched  for  the  signature. 
He  indorsed  it  in  their  presence ;  and  thus  every  for- 
mal requisition  in  bank  practice  was  complied  with. 

There  was  now  no  obstacle  to  his  drawing  his  own 
checks  against  the  deposit,  which  he  did  for  the  entire 
amount  within  an  hour ;  and  although  some  suspicion 
was  excited  by  this  summary  use  of  the  whole,  it  was 
allayed  again  by  the  unquestionable  genuineness  of 
the  certification. 

This  forgery  remained  undiscovered  for  a  fortnight ; 
and  was  brought  to  light  only  by  the  apparent  over- 
draft of  the  merchant's  account,  which  led  to  a  com- 
parison of  his  check-book  with  the  bank  ledger.  The 
difierence  being  the  exact  amount  of  the  fraudulent 
check,  it  was  easily  detected. 

The  overdraft  of  an  ordinarily  well-kept  account 
raises  an  immediate  presumption  of  error  or  forgery. 
Either  a  deposit  may  have  been  omitted,  or  a  check 
wrongly  paid.  The  book-keeper  sends  for  the  dealer's 
bank-book,  balances  it,  and  returns  the  cliecks  can- 
celled, in  which  process  the  discrepancy  is  explained. 
It  is  by  no  means  improbable,  liowever,  that  forged 
checks  sometimes  elude  detection  both  by  Teller  and 
dealer,  in  which  case  the  latter  is  the  loser.  In  neither 
of  the  instances  given  was  the  dealer  himself  able  to 
distinguish  the  fraudulent  from  the  genuine  signature  ; 
and  but  for  the  experimental  question  of  the  Teller  in 


126  THE   PAYING   TELLEK. 

one  case,  and  the  collateral  evidence  of  tlie  mercliant's 
cash-book  in  the  other,  both  might  have  gone  through 
the  accounts,  and  the' dealers  been  so  much  poorer, 
but  no  wiser. 

Is  it  possible  that  men  in  business  might  incur 
these  serious  losses  without  such  sensible  inconve- 
nience as  to  excite  suspicion  and  search,  or  without 
the  ability  to  trace  and  detect  them  ? 

Yes.  No  fault  is  so  common  among  merchants  as 
that  of  keeping  an  inexact  and  slovenly  cash-book. 
Instead  of  a  daily  test  balance,  the  cash  account  is 
often  suffered  to  run  for  a  week,  more  or  less,  until 
the  current  disbursements  and  receipts  are  so  jumbled 
together  as  to  defy  all  analysis  or  proof.  A  balance 
is  then  forced — supposed  to  be  "  not  far  out  of 
the  way — nothing  to  affect  the  general  results  of  the 
business."  ISTot  hundreds  merely,  but  thousands  of 
dollars  are  lost,  both  by  slow  abstraction  and  in  the 
lump,  through  the  little  opening  between  an  exact 
balance  and  the  difference  of  "  a  few  dimes !" — and 
the  loser  is  unconscious  that  this  may  be  the  chief 
cause  that  urges  him  towards  insolvency. 

There  are  circumstances  under  which  it  may  be 
impossible  for  the  Paying  Teller  to  detect  forgery. 

Some  years  since,  the  financial  clerk  of  a  wealthy 
importing  house  presented  a  forged  check  for  ten 
thousand  dollars  at  the  counter  of  one  of  our  principal 
banks,  and  it  was  paid  without  hesitation.  He  had 
long  been  in  the  service  of  his  employers,  was  known 
to  enjoy  their  full  confidence,  and  to  hold  the  custody 
of  their  private  papers.     It  was  a  usual  circumstance 


CARELESS   CASH   ACCOUNTS.  127 

for  the  house  to  draw  checks  for  that  or  larger  amounts, 
and  the  frand  was  consummated  without  joresenting 
a  single  point  to  excite  suspicion.  It  was  discovered 
by  the  report  of  an  overdraft  in  the  account,  and  the 
simultaneous  elopement  of  the  guilty  clerk. 

The  following  singular  case  came  within  the  know- 
ledge of  the  writer. 

The  bank  account  of  a  highly  respectable  house 
was  reported  overdrawn  two  thousand  dollars ;  and 
one  of  the  firm  denied  the  genuineness  of  a  particular 
check  for  that  amount.  A  number  of  his  checks 
were  so  arranged  as  to  conceal  all  but  the  signatures, 
and  he  was  requested  to  point  out  the  forgery.  He 
acknowledged  his  inability  to  discriminate  between 
that  and  any  other.  On  close  inquiry,  it  appeared 
that  he  had  been  in  the  habit  of  signing  checks  in 
blank  to  the  order  of  his  book-keeper,  to  be  used 
in  his  absence,  and  the  one  in  question  was  of  this 
description,  excepting  that  it  was  payable  to  bearer. 
He  was  asked  if  he  could  swear  that  the  signature 
was  not  his  own — to  which  he  answered  in  the  nega- 
tive. Yet  it  was  not  made  subject  to  order  in  his 
usual  form,  and  he  had  no  recollection  of  having 
signed  it.  Under  these  circumstances,  the  bank 
insisted  that  it  was  genuine,  and  the  house  submitted 
to  the  loss. 

There  are  circumstances  under  which  a  bank 
might  be  exempt  from  liability  for  the  payment 
of  forged  checks.  A  want  of  due  care  by  the  mer- 
chant to  guard  his  own  affairs  against  attack, 
though  a  vague  ground  of  defence,  is  entitled  to 


128  THE   rATING   TELLEE. 

some  weight.  The  employment  as  clerk  of  a  person 
known  by  liim  to  have  committed  forgery  would  be 
a  good  defence  in  equity,  if  not  in  law. 

It  would  be  tedious  to  describe  all  the  ingenious 
devices  of  the  forger  to  blind  the  Paying  Teller. 
When  an  old  trick  wears  out,  a  new  one  is  invented. 
While  he  is  on  the  watch  against  new  tricks,  an  old 
one  is  suddenly  revived. 

The  signature  and  indorsement  of  a  check  being 
genuine,  the  Teller  must  be  satisfied  that  the  account 
of  the  drawer  is  good. 

Some  of  our  larger  banks  have  fifteen  hundred 
accounts  open  in  the  ledgers,  all  of  which  are  liable 
to  draft  without  notice.  It  rarely  happens  that  more 
than  one-fourth  of  them  are  checked  against  on  any 
single  day.  Some  will  remain  unused  a  week  or  a 
month,  and  then  suddenly  start  into  great  activity. 
Some  show  regular  daily  receipts  and  payments, 
with  one  deposit  and  from  two  to  five  checks.  Some 
will  have  a  single  deposit  at  long  intervals,  with 
checks  once  or  twice  a  week  to  pay  family  expenses. 
Some  will  accumulate  rents  and  dividends  for  several 
months,  and  be  drawn  against  in  one  large  sum  for 
investment.  The  account  of  an  active  merchant  will 
show  from  five  to  fifteen  checks  in  a  day,  while  that 
of  a  broker  or  private  banker  will  have  over  one 
hundred.  Some  will  always  have  a  respectable 
balance  on  hand,  no  matter  how  many  checks  are 
paid,  and  others  a  small  balance,  no  matter  how  few 
are  paid. 
The  question  occurs, — How  can  the  Teller  remember 


CLASSIFICATION   OF   ACCOUNTS.  129 

the  balances  of  fifteen  hundred  different  accounts 
while  paying  or  certifying  checks  at  the  rate  of  three 
or  four  in  a  minute  ? 

From  a  careful  examination  of  the  deposits  and 
checks  of  a  dealer,  it  is  easy  to  judge  whether  they 
belong  to  a  legitimate  business,  or  whether  they  are 
mostly  mere  transfers  between  different  persons  and 
accounts ;  also  to  what  extent  his  balances  are  main- 
tained by  loans  and  transient  accommodations.  It  is 
not  difficult  to  ascertain  whether  a  man  uses  his  credit 
excessively  or  with  prudence  ;  nor  to  get  information 
of  his  personal  habits,  associations,  and  general  cha- 
racter. The  contact  of  the  Teller  with  merchants  in 
all  branches  of  trade  affords  many  opportunities  of 
inquiry  which,  with  those  in  possession  of  the  bank 
officers,  enable  him  to  classify  the  dealers,  and  thus 
assist  his  memory. 

In  the  first-class  stand  those  of  known  large  capital, 
who  never  give  out  their  own  notes.  They  may  sell 
on  credit,  but  they  buy  always  for  cash.  Their  de- 
posits in  bank  are  generally  far  greater  than  their  im- 
mediate wants.  When  their  checks  are  presented, 
the  Teller  may  safely  pay  them  without  reference  to 
the  condition  of  their  accounts ;  for  if  they  should 
even  appear  overdrawn  at  the  moment,  he  knows 
that  they  will  make  an  ample  deposit  before  the  close 
of  the  day.  In  addition  to  this,  they  are  likely  to 
have  a  considerable  amount  of  promissory  notes 
lodged  in  the  bank  for  collection  which  are  a  colla- 
teral security. 

The  middle  class  of  dealers  are  the  most  numerous. 
Less  independent  as  it  regards  capital,  and  relying  on 

6* 


130  THE   PAYING   TELLER. 

the  bank  for  loaus,  they  are  yet  generally  safe  and 
trustworthy.  They  will  not  transgress  its  rules,  lest 
they  forfeit  its  confidence.  The  Teller  pays  their 
checks  commonly  without  examining  their  accounts, 
depending  on  their  integrity  and  self-interest  to  rec- 
tify possible  errors  by  overdraft  or  otherwise. 

Next  come  the  retail  shopkeepers,  mechanics,  and 
small  manufacturers.  Many  of  this  class  keep  ac- 
cumulating accounts,  and  seldom  call  for  loans ;  or 
if  so,  to  a  very  moderate  extent.  Separately,  their 
deposits  are  not  large,  but  in  the  aggregate,  they  add 
materially  to  the  loaning  facilities  of  the  bank. 
They  draw  but  few  checks,  and  their  accounts  are  not 
liable  to  sudden  changes.  The  Teller  soon  acquires 
such  a  knowledge  of  them  as  to  remember  which 
need  watching ;  and  the  Book-keepers  aid  him  in  this 
by  an  alphabetical  list  of  balances.  An  old  bank 
gradually  expurgates  its  ledgers  of  troublesome 
accounts,  while  a  new  bank,  from  competition  for 
business,  or  non-acquaintance  with  the  character  of 
dealers,  is  likely  to  fall  heir  to  them. 

By  this,  or  some  similar  classification,  the  Paying 
Teller  is  able  to  "  keep  the  run "  of  his  customers 
with  surprising  closeness.  But  there  is  still  room  left 
for  accidents  and  irregularities,  which  are  a  source  of 
perpetual  annoyance  to  him.  The  number  of  de- 
positors who  lack  mercantile  training  is  very  large. 
They  have  never  learned  the  value  of  time  or  rules 
in  business,  and  "  hot  water  "  seems  to  be  their  "  na- 
tive element."  They  can  seldom  tell  what  money 
they  have  on  deposit  without  asking  the  bank  Book- 
keeper.    They  make  mistakes  of  addition  in  their 


IMPOSITIONS   ON    THE   TELLER.  131 

check-books,  or  omit  entries,  or  give  out  checks  with- 
out recording  them.  It  is  not  unusual  for  people  of 
this  careless  character  to  meet  in  a  bank  lobby  to 
consummate  street  bargains,  and  to  take  from  their 
hat  crowns  loose  checks  which  they  exchange  for 
hundreds  or  thousands  of  dollars ;  they  post-date 
them  a  week  or  a  fortnight ;  the  printed  title  of  the 
bank  is  often  erased,  and  that  of  another  illegibly 
substituted ;  the  signatures  are  carelessly  written,  and 
blotted  by  folding,  and  they  are  stuffed  in  a  pocket- 
wallet,  to  be  forgotten,  or  remembered  by  accident. 
They  give  notes  to  each  other  drawn  payable  at  banks 
where  they  keep  no  account.  All  these  documents, 
when  due,  are  presented  to  the  Paying  Teller,  who  is 
thus  made  the  focus  of  many  irregularities  by  total 
strangers.  There  is  not  an  hour  of  the  day  free  from 
their  annoyance.  He  must  examine  them  to  ascer- 
tain what  they  are,  and  his  time  is  taxed,  often  when 
he  is  most  occupied  with  pressing  duties. 

A  man  offers  a  promissory  note  of  Thomas  Brown, 
for  certification. 

"  Mr.  Brown  keeps  no  account  here." 

"  Dont  you  think  he'll  send  the  money  to  pay  it  ?" 

"  I  dont  know  anytliing  about  him." 

"  Wont  you  take  the  note  and  hold  it  till  the  money 
comes  ?" 

"  No,  sir.     It's  contrary  to  our  rules." 

"What  shall  I  do?" 

"  I  can't  give  you  any  help,  sir." 

Jacob  Grimes  keeps  no  bank  account,  but  he 
takes  the  liberty  of  making  his  notes  payable  at  the 


132  THE   PAYING   TELLER. 

Commercial  Bank.     He  brings  a  handful!  of  bills  or 
gold,  and  offers  it  to  the  Teller. 

"  What  is  that  for  ?" 

"  To  pay  mj  note  due  to-day." 

"  It  is  not  our  practice  to  receive  money  from  per- 
sons M'ho  keep  no  account  with  us." 

This  is  something  new  to  Mr.  Grimes.  "What  are 
banks  made  for,"  he  thinks,  "  if  not  to  accommodate 
the  public." 

He  considers  the  Teller  churlish,  and  the  bank  "  a 
nuisance" ;  but  he  does  not  consider  that  his  own  case 
would  be  but  one  of  twenty  or  thirty  if  the  practice 
were  admitted,  and  that  it  would  then  be  a  serious 
interference  with  the  regular  duties  of  the  Teller. 
Neither  does  he  reflect  that  the  bank  would  be 
responsible  if  a  forged  note  should  be  paid  instead  of 
the  genuine  one,  which  might  easily  occur,  since  the 
Teller  is  unacquainted  with  the  signature  of  the 
drawer. 

Mr.  Grimes  may  be  obliged  to  wait  at  the  counter 
of  the  Paying  Teller  half  the  day  before  his  note  is 
presented — involving  a  loss  of  time,  and  perhaps 
of  temper  also,  for  which  nobody  but  himself  is  to 
blame. 

Merchants  in  distant  cities  frequently  make  their 
notes  payable  at  a  bank  in  "New  York,  and  remit  the 
money  within  a  short  time  of  their  maturity.  To  send 
it  back  would  cause  the  note  to  be  protested,  and 
injure  the  credit  of  the  drawer.  The  letter  of  instruc- 
tion with  the  inclosure  is  therefore  handed  over  to  the 
Teller,  who  pays  the  note  when  it  is  presented.     It  is 


IMPOSITIONS.  133 

then  cancelled  and  returned  to  the  remitter.  Instead 
of  bank  checks,  drafts  on  other  parties,  and  sometimes 
on  other  cities,  are  sent,  which  adds  both  labor  and 
risk  to  the  gratuitous  service.  Bank  officers  have 
occasionally  advised  this  class  of  correspondents  that 
their  letters  would  not  be  taken  from  the  post-office  if 
they  continued  the  practice  :  but  it  has  grown  into  a 
permanent  annoyance,  and  is  mostly  submitted  to. 

The  common  idea  that  banks  are  public  institutions 
is  probably  the  ground  on  which  they  are  expected  to 
serve  the  public  without  compensation.  It  should  be 
remembered  that  they  are  private  associations,  or- 
ganized for  the  special  benefit  of  the  stockholders, 
and  not  for  that  of  the  people  at  large.  They  have 
as  much  right  as  an  individual  merchant  to  refuse 
service  that  yields  no  compensation.  They  cannot 
escape  legal  responsibility  to  their  accepted  dealers, 
for  any  omission  or  neglect  of  j)roper  forms ;  but  they 
cannot  be  forced  to  assume  responsibility  against  their 
choice  or  judgment. 

If  non-residents  and  parties  who  keep  no  bank 
account  were  required  to  pay  a  small  commission  for 
this  kind  of  imposed  service,  it  might  become  an 
acknowledged  function  of  the  business. 

There  are  many  cunning  and  unscrupulous  persons 
who  maintain  the  appearance  of  respectability  in 
their  bank  dealings  until  an  opportunity  offers  to 
secure  some  advantage  by  trick  or  accident.  They 
may  obtain  an  introduction  through  other  dealers  with 
whom  they  are  connected  in  trade,  and  who  are  them- 
selves deceived  as  to  their  real  character.  By  adroit 
management,  and  strict  propriety  of  conduct,  they 


134  THE  PAYING   TELLER. 

gradually  win  the  confidence  of  the  officers  and  clerks, 
and  obtain  considerable  loans,  with  the  usual  indulg- 
ences that  are  enjoyed  by  good  customers.  An 
overdraft  of  account  by  cross  deposits  with  dealers  in 
other  banks  may  first  expose  them  in  their  true  colors. 
K  money  should  be  credited  to  them  by  mistake,  they 
would  not  hesitate  to  use  it.  Instead  of  reporting 
errors  in  their  favor,  they  would  adopt  them,  and 
keep  silence.  They  change  their  accounts  from  one 
bank  to  another  as  their  tricks  fail,  or  when  they  have 
gained  all  they  can  hope  for.  Against  these,  the 
combined  vigilance  of  the  Teller  and  other  clerks  is 
not  always  successful. 

"  Do  you  know,"  asks  the  Book-keeper  of  the  Paying 
Teller,  "  that  you  overpaid  Samuel  Filibuster's  ac- 
count a  thousand  dollars  yesterday  ?" 

" ISTo.     But  he  is  an  honorable  man,  isn't  he?" 

"  He  has  always  kept  a  fair  balance ;  and  I  have 
never  seen  any  proof  of  his  being  tricky." 

"  Well — send  for  his  book,  and  write  it  up.  There 
may  be  a  deposit  or  a  collection  omitted !" 

The  examination  discloses  no  error  of  the  kind. 
The  Teller  thinks  that  Mr.  Filibuster  may  continue  to 
make  deposits  as  usual,  and  afford  him  an  opportunity 
to  reserve  the  amount  of  the  overdraft.  If  it  is  an 
unconscious  error  on  his  part,  he  will  do  so.  But  the 
day  passes  without  such  fortunate  accident.  It  is 
certain  Mr.  Filibuster  knows  that  he  has  checked 
out  of  the  bank  a  thousand  dollars  more  than  he  had  a 
right  to,  and  that  he  means  to  make  the  most  of  it. 
This  is  the  very  "  accident"  that  he  has  hoped  for, 
and  in  view  of  which  he  has  long  and  carefully 


SAMUEL   FILIBUSTER.  136 

observed  the  rules,  to  win  the  confidence  of  the 
bank. 

It  is  the  duty  of  the  Teller  to  report  such  a  trans- 
action to  the  superior  officers ;  but  as  it  will  weigh 
against  his  character  for  vigilance  and  sagacity,  he 
first  attempts  to  recover  the  amount  by  personal 
negotiation  with  Mr.  Filibuster.  That  gentleman 
protests  that  it  is  "  a  most  unaccountable  error"  and 
one  which  he  exceedingly  regrets  ;  but  he  has  no 
means  in  possession  to  rectify  it  at  present. 

"  I  trusted  to  your  honor,  Mr.  Filibuster.  You 
know  it  is  an  injury  to  a  dealer  to  examine  his 
accounts  before  paying  his  checks !" 

"  Yes,  sir — and  I  am  very  sensible  of  your  gentle- 
manly conduct  in  the  whole  course  of  my  dealings 
with  you.  I  must  say  you  have  treated  me  with 
great  politeness,  and  I  feel  the  more  regret  for  that 
reason." 

"  Cant  you  deposit  part  of  the  sum  to-day,  and 
the  rest  to-morrow  ?" 

"  Indeed,  sir,  that  is  quite  impossible." 

"  I  dont  want  to  report  this  to  the  President  and 
Cashier,  for  that  would  injure  you  in  their  esteem. 
But  I  shall  be  obliged  to  do  so,  unless  you  make  your 
account  good." 

These  considerations,  urged  w^ith  very  conciliatory 
manner  by  the  Teller,  in  spite  of  the  indignation 
which  he  feels  burning  within,  almost  impelling  him 
to  a  personal  assault  on  "  the  scoundrel"  for  his  "  vil- 
lainy," are  without  efiect.  He  steps  into  the  Cashier's 
room,  and  tells  him  of  the  misfortune. 

"  Mr.   Filibuster    has  overdrawn    his    account   a 


136  THE   PAYING   TELLER. 

thousand  dollars,  sir,  and  now  refuses  to  make  it 
good." 

"  "What !  Filibuster  ? — I  thought  he  was  an  honor- 
able man !" 

"  So  did  I,  sir.  He  has  kept  up  a  good  show  in  his 
account — ^I  suspect  for  this  very  purpose." 

"  Send  him  to  me." 

The  Cashier  considers  it  a  piece  of  extraordinary 
luck  if,  after  a  fortnight's  negotiation,  he  can  bring 
Mr.  Filibuster  to  give  his  notes  at  six,  nine,  and 
twelve  months,  for  the  amount  of  his  overdraft.  A 
civil  suit  would  yield  but  a  barren  judgment,  if  suc- 
cessful, besides  increasing  the  loss. 

The  identification  of  indorsers  gives  more  annoy- 
ance to  the  Paying  Teller  tlian  any  other  part  of  his 
business.  The  object  of  making  a  check  payable  "  to 
order"  is,  on  the  part  of  the  drawer,  that  he  may 
have  the  indorsement  of  the  person  to  whom  it  is 
given  as  an  additional  evidence  of  the  payment ;  and 
the  receiver  of  the  check  desires  it  as  a  security  in 
case  of  loss.  The  risk  of  the  indorsement  is  thus 
thrown  on  tlie  bank.  If  it  should  pay  a  lost  or  stolen 
check  with  a  forged  indorsement,  the  person  to  Avhom 
the  money  is  due  may  claim  the  payment  over  again. 
There  is  no  apparent  commercial  propriety  or  justice 
in  dealers  throwing  this  risk  on  the  bank,  as  it  really 
belongs  to  their  own  business.  A  check  drawn  pay- 
able "  to  bearer  "  is  as  legal  and  complete  payment 
as  if  drawn  payable  to  the  order  of  the  receiver.  It 
is  a  reasonable  precaution  in  the  transmission  of 
checks  by  mail,  to  make  them  subject  to  the  order  of 
those  to  whom  they  are  sent ;  but  this  is  unnecessary 


rOENTITYING  INDOESERS — JOHN   GILPIN.  137 

in  direct  personal  transactions.  It  is  a  source  of 
annoyance  and  frequent  disjDute  to  the  holder  of  a 
check  as  well  as  to  the  Teller.  He  is  frequently  a 
stranger,  and  can  offer  no  positive  proof  of  his  iden- 
tity. 

John  Gilpin,  of  Maine,  presents  a  check  at  the 
counter  payable  to  his  order. 

"  Who  is  John  Gilpin?"  asks  the  Teller. 

"  That  is  my  name,  sir." 

"  I  have  no  doubt  of  it ;  but  our  rules  require  that 
we  should  have  some  proof  of  it." 

Mr.  Gilpin  has  not  a  single  acquaintance  in  New 
York  who  happens  to  be  known  at  the  bank.  He 
returns  to  the  maker  of  the  check,  at  the  suggestion 
of  the  Teller,  and  requests  him  to  vouch  for  the 
indorsement,  or  to  change  it  for  another,  payable  "  to 
bearer  "  instead  of  "  order."  This  being  refused,  he 
presents  it  again  at  the  bank,  and  complains  that  he 
is  subjected  to  such  trouble  and  loss  of  time.  He 
thinks  the  Teller  is  "  more  nice  tlian  wise."  But 
there  is  no  reason  why  the  bank  should  assume  a 
dealer's  risks,  when  the  dealer  himself  is  afraid  of  them. 

The  certification  of  the  check  may  improve  the 
holder's  chances  of  using  it  in  another  channel.  The 
bank  is  then  bound  to  pay  it  when  the  indorsement  is 
properly  verified. 

Indorsed  checks  paid  through  the  Exchange,  are 
understood  to  be  guarantied  by  the  bank  from  which 
they  are  received ;  and  any  that  are  unsatisfactory  or 
informal  are  immediately  returned  for  correction. 
Any  bank  will  guarantee  the  indorsements  of  a  dealer 
in  whom  it  has  confidence. 


138  THE   PATESTG   TELLER. 

In  mcany  cases,  the  Teller  trusts  to  bis  skill  in 
physiognomy  and  in  the  discernment  of  character, 
and  pays  checks  without  positive  identity  of  the  in- 
dorsers. 

The  most  acceptable  form  of  check  to  the  Teller 
is,  that  which  is  printed  payable  "  to  bearer."  His 
only  responsibility,  then,  is  for  the  genuineness  of  the 
signature  and  the  state  of  the  account.  If  such  a 
check  should  be  lost,  and  subsequently  paid  to  a  dis- 
honest finder,  neither  the  bank  nor  the  drawer  of  it 
would  suffer — ^but  only  the  person  who  lost  it,  as  in 
the  case  of  a  bank  bill.  The  vigilance  of  the  Teller 
is  alive,  however,  to  be  assured  that  "  the  bearer  "  is 
the  right  bearer.  Any  remission  of  personal  scrutiny 
of  all  who  approach  his  counter,  would  be  to  abandon 
the  outer  wall  of  his  defence  against  forgery. 

The  i^ractice  of  certifying  checks  for  the  better 
class  of  dealers,  before  they  have  made  their  deposit, 
is  common  in  our  city  banks.  It  is  a  measure  of  the 
credit  which  the  bank  is  willing  to  give.  A  cus- 
tomer who  thinks  himself  entitled  to  it,  takes  offence 
at  its  refusal,  and  withdraws  his  account,  A  whole- 
sale merchant  would  deal  more  cautiously  with  a  job- 
ber, if  his  checks  did  not  command  this  credit  in  his 
own  bank. 

This  advance  certification  is  an  indispensable  econ- 
omy in  our  method  of  banking.  The  funds  which 
compose  the  deposits  of  a  dealer,  are  the  product 
of  sales  or  collections  made  at  different  hours  of 
the  day,  and  they  cannot  be  brought  together  in  one 
sum  until  near  the  close  of  it.  Their  deposit  in 
several  sums  would  add  immeasurably  to  the  labor 


CEETIFTING  CHECKS   IN   ADVANCE.  139 

of  the  clerks  by  multiplying  entries ;  and  if  the 
Teller  should  withhold  certification  until  the  credits 
are  actually  made,  the  transactions  of  the  day  would 
be  crowded  into  the  last  hours,  causing  much  incon- 
venience and  increased  risk  of  error.  The  aggregate 
certifications  of  a  bank  in  full  business  may  reach 
several  hundred  thousand  dollars  before  the  deposits 
begin  to  come  in — all  depending  on  the  discretion 
and  judgment  of  the  Paying  Teller,  At  the  close  of 
the  day,  the  Book-keepers  report  to  him  whether  any 
dealers  have  failed  to  make  good  their  accounts. 

"When  the  market  is  growing  tight,  the  Teller  be- 
comes more  watchful  of  his  certifications.  The 
failure  of  two  or  three  usually  prompt  dealers  to 
cover  their  checks  seasonably,  is  perhaps  the  first 
warning  for  this  necessity.  All  but  the  first  class  of 
customers  are  told,  that  it  is  "  against  the  rules  to 
certify  in  advance  of  the  deposit." 

"Then  you  have  constantly  violated  your  own 
rules !" 

"  It  is  safe  to  relax  them  in  an  easy  market ;  but 
our  experience  proves  it  to  be  unsafe  in  a  tight 
market." 

Eeflecting  men  see  the  reason  for  this,  and  conform 
to  it,  while  others  get  angry  and  denounce  the  bank 
and  all  its  officers  and  clerks  as  "  arrogant "  and 
"undeserving  of  public  confidence."  It  is  not  far 
Wrong  to  set  the  latter  down  as  among  the  weaker 
class,  towards  whom  extra  caution  will  be  prudent. 
A  merchant  of  sound  capital  has  a  common  interest 
with  the  bank  in  clipping  the  widely-spread  wings 
of  credit,  by  which  commerce  generally  is  endangered. 


140  THE   PAYING   TELLER. 

A  great  service  comes  to  the  trading  community 
from  the  periodical  contraction  of  bank  facilities. 
The  collection  of  debts  is  more  diligently  urged,  and 
wild  speculation  is  arrested. 

When  thfe  return  Exchange  is  brought  in  from  the 
Clearing  House,  it  is  counted  on  a  separate  table,  and 
proved  by  an  Assistant.  The  checks  and  bills  of 
which  it  is  composed  are  incorporated  with  the 
accoimts  of  the  Paying  Teller.  The  checks  must 
undergo  the  same  inspection  as  those  w^hich  are  paid 
over  the  counter.  The  signature,  date,  and  indorse- 
ment of  each  one  is  separately  examined,  and  the 
accounts  drawn  against  ascertained  to  be  good. 
Among  these  are  many  checks  of  distant  banks  and 
correspondents,  often  with  six  or  eight  transfer  in- 
dorsements, for  the  general  accuracy  of  which  the 
last  remitting  bank  is  held.  The  Teller  particularly 
observes  that  the  course  of  transfer  from  one  to  ano- 
ther is  correct ;  and  requires  a  special  guarantee 
indorsement  of  the  city  bank  to  which  it  is  paid,  for 
any  informality  or  omission.  If  at  any  subsequent 
time  it  should  be  discovered  that  one  of  the  indorse- 
ments is  fraudulent,  it  claims  repayment  from  said 
bank,  which  claims  in  turn  from  its  correspondent, 
and  60  on,  until  the  first  victim  of  the  fraud  is  reached, 
on  whom  the  loss  falls.  If  the  forms  of  transfer 
appear  to  be  correct,  the  guarantee  against  forgery  is 
valid  by  custom  without  special  writing. 

While  the  Teller  is  pursuing  this  examination,  the 
current  business  of  the  day  goes  on  with  increasing 
pressure  from  the  outside.  So  long  as  he  can  dispose 
of  the  applications  uninterruptedly,  as  they  are  pre- 


INTEKEUPTIONS.  141 

sented,  the  lobby  is  comparatively  quiet  and  free 
from  obstruction ;  but  even  a  momentary  stoppage 
causes  the  crowd  to  gather,  and  soon  ten  or  -a  dozen 
persons  are  waiting  to  be  served  in  turn.  Expressions 
of  impatience  are  not  uncommon.  The  Teller  is  pro- 
nounced "slow" — "indifferent  to  the  convenience  of 
customers  " — "  incompetent "  and  "  tantalizing,"  by 
his  deliberation  of  movement.  Deliberation  is  the 
secret  of  his  accomplishing  so  much.  In  truth,  there 
is  hardly  a  moment  when  he  may  not  be  said  to  be 
doing  two  or  more  things  at  once,  and  yet  with  such 
a  habit  of  concentration  on  each  at  the  juncture  as  to 
avoid  confusing  them  together. 

The  interruptions  to  which  he  is  subject  are  almost 
incessant.  The  Cashier  has  just  received  advice  of 
the  issue  of  a  number  of  duplicate  checks  by  a  corre- 
sponding bank,  to  replace  the  originals  which  have 
been  lost  in  the  mail.  He  brings  the  letter  and  list 
of  duplicates  to  the  Teller,  who  is  occupied  several 
minutes  in  obtaining  a  clear  understanding  of  the 
case.  Some  of  the  originals  might  be  in  the  hands 
of  persons  then  waiting  to  be  served,  and  he  must  be 
able  to  detect  them  at  sight. 

"  Will  you  pay  me  this  check,  sir  ?  I  don't  want  to 
be  kept  here  half  a  day  !"  growls  a  hot-tempered  cus- 
tomer at  the  gate. 

"  Yes,  sir,"  answers  the  Teller,  "  if  you  will  have 
the  discrepancy  corrected  between  the  figures  and 
the  writing." 

"  How  did  your  exchanges  come  out  the  day  before 
yesterday?"  asks  a  messenger  from  another  bank. 


142  THE   PAYING   TELLER. 

"  A  thousand  dollars  over." 

"  That's  lucky !  Our  Teller  is  short  a  thousand — 
that  must  be  it !" 

"  Well,  if  he  can  establish  his  claim,  and  no  other 
bank  contests  it,  I'll  pay  it." 

It  is  a  mutual  obligation  between  bank  tellers  to 
afford  each  other  every  facility  for  discovering  such 
errors.  One  who  does  not  answer  truly  and  promptly, 
can  hardly  expect  to  be  so  answered  in  his  turn. 

The  Teller  might  appropriate  this  thousand  dollars 
to  himself;  but  he  is  too  well  aware  of  the  hazards  of 
detection.  He  cannot  know  that  it  has  not  been 
designedly  placed  in  his  way,  and  that  the  bank  offi- 
cers are  not  in  the  secret.  However  dishonorable  it 
may  seem  to  resort  to  such  a  plan  for  detection,  none 
other  is  so  easy,  effectual,  and  harmless ;  for  the  dis- 
honest only  can  be  injured.  It  is  objectionable  on 
the  ground  of  laying  temptation,  and  inducing  a  first 
fault.  Yet  what  is  to  be  done,  when  suspicion  has 
been  awakened,  and  where  fraud  may  be  practiced 
so  secretly  as  to  defy  all  ordinary  vigilance? 

"  I  want  five  thousand  dollars  in  gold  for  that 
check — not  good,"  says  another  bank  messenger. 

The  Porter  or  Specie  Clerk,  who  keeps  the  coin 
prepared  for  such  demands,  is  absent,  and  the  Teller 
may  be  obliged  to  go  to  the  vault  for  it. 

In  the  next  moment,  a  check  which  had  been  sent 
to  another  bank  through  the  exchanges,  is  returned 
for  a  written  guarantee  of  indorsement.  If  satisfied 
of  its   correctness,  the  Teller  gives  the  guarantee. 


INCIDENTS MK.    BUNGLE.  143 

Otherwise  he  pays  the  money  for  it,  and  returns  it  to 
the  dealer  who  had  deposited  it. 

A  stranger  offers  to  the  Teller  five  hundred  dollars 
in  bills,  to  pay  a  check  which  he  had  drawn  on  the 
bank.  Keeping  no  account,  his  money  is  refused, 
but  he  persists  in  an  altercation  about  it,  to  the  hin- 
drance of  those  behind  him. 

A  dealer  wants  thirty  or  forty  thousand  dollars  in 
coin,  to  pay  duties  at  the  Custom  House. 

Another  hands  in  a  memorandum  of  a  check  that 
he  has  given  out,  but  of  which  he  wants  to  arrest 
payment. 

Another  inquires  whether  a  lost  check,  of  which  he 
had  previously  given  notice,  has  been  paid. 

A  Porter  from  the  Merchants'  Bank  presents  a  dozen 
notes  of  different  parties  for  certification,  and  he  is 
immediately  followed  by  one  from  another  bank,  with 
a  bag  of  gold  which  he  reports  ten  dollars  short,  and 
which  may  be  the  occasion  of  some  dispute. 

The  other  clerks  have  frequent  necessity  to  com- 
municate with  the  Paying  Teller  with  respect  to  the 
state  of  accounts,  and  he  with  them. 

A  noisy  colloquy  occurs  with  a  dealer  whose  check 
has  been  refused,  because  of  his  deposit  having  been 
credited  to  another  party ;  and  with  another  whose 
account  appears  deficient,  because  a  promised  discount 
of  paper  has  not  been  entered  on  the  books. 

"  Here !"  says  Mr.  Bungle,  returning  a  handful  of 


144  THE   PAYING   TELLER. 

rumpled  bank  bills  and  coin,  "  that  money  which  you 
paid  me  is  twenty  dollars  short."  The  Teller  examines 
it,  and  satisfies  Mr.  Bungle  that  the  error  was  in  his 
own  counting. 

Many  persons  who  present  checks  are  so  ignorant 
of  bank  usage  as  not  to  know  when  an  indorsement 
is  necessary ;  some  forget  it  until  they  have  reached 
the  Teller's  gate,  and  are  then  obliged,  after  filling 
the  omission,  to  take  their  place  again  at  the  foot  of  a 
line  of  twenty,  and  wait  their  turn.  In  character  and 
disposition,  the  applicants  ai*e  as  difierent  as  in  their 
features — boys,  workmen,  sailors,  doctors,  knaves,  and 
drunkards.  Some  want  "  half  gold  and  half  notes," 
some  "  half  silver  and  the  rest  in  small  bills,"  some 
"  all  bills,"  and  some  "  all  gold  and  be  damned  to  you." 

The  Teller  is  often  obliged  to  break  away  from  a 
line  of  impatient  customers  to  prepare  his  settlement 
balance  of  two  hundred  thousand  dollars  (more  or 
less)  to  be  sent  to  the  Clearing  House,  or  to  receive 
the  same.  If  he  has  not  the  whole  sum  in  coin  certi- 
ficates, he  pays  part  in  gold. 

There  are  three  other  channels  through  which 
checks  may  be  paid  by  the  bank,  simultaneously 
with  their  payment  by  the  First  Teller.  The  Xote 
Teller  may  receive  them  in  discharge  of  a  note ;  the 
Deposit  Teller  may  take  them  in  credit,  and  the  Kun- 
ner  in  settlement  of  a  draft — each  without  the  know- 
ledge of  the  others.  For  example,  if  Alexander  Jones 
has  a  balance  of  one  thousand  dollars  in  the  bank,  he 


ALEXANDER   JONES.  145 

may  draw  that  amount  in  bills  or  gold  from  the 
Paying  Teller;  he  may  give  his  check  for  it  to 
another  dealer  for  deposit  in  the  same  bank ;  he  may 
take  up  a  note  with  it  at  the  Note  Teller's  desk ;  and 
he  may  pay  a  sight  draft  with  it  to  the  Runner: 
so  that  he  may  draw  out  four  thousand  dollars,  while 
he  has  a  balance  of  but  one  thousand.  There  are 
two  guards  against  this,  as  it  respects  the  Tellers, 
viz. :  their  mutual  advisements,  and  the  good  faith 
of  Alexander  Jones.  The  Runner  has  the  latter 
only  to  rely  upon ;  for  he  cannot  tell  whether  the 
check  is  good  or  bad  until  he  returns  to  the  bank.  It 
is  a  creditable  fact,  both  to  the  integrity  of  dealers 
and  to  the  watchfulness  of  the  clerks,  that  fraud  is 
seldom  attempted  by  the  duplication  of  checks  in 
this  manner.  The  bank  owes  its  security,  no  doubt, 
to  the  power  of  credit.  If  men  are  not  governed  by 
correct  principles,  they  are  restrained  by  the  fear  of 
being  cut  off  from  facilities  which  are  essential  to 
their  success  in  trade. 

If  a  dealer  deposits  checks  on  other  banks,  which 
prove  not  good  when  sent  through  the  exchanges, 
they  are  chargeable  to  his  account  directly,  or  he  is 
bound  to  redeem  them.  But  a  check  on  the  same. 
hanh  is  as  actually  paid  when  taken  in  deposit  by 
the  Receiving  Teller,  as  if  paid  by  the  First  Teller  in 
bank  bills ;  and  if  it  should  not  be  good,  the  recourse 
of  the  bank  is  to  the  drawer  of  it — not  to  the  depositor. 
Likewise,  if  a  dealer  takes  up  his  note  with  the  check 
of  another  dealer  on  the  same  bank,  the  recourse  of  a 
bank  is  to  the  drawer  of  the  check,  and  not  to  that 
dealer. 


146  THE   PAYLNO   TELLEK. 

The  proportion  of  checks  liquidated  through  the 
several  other  channels  together,  is  small  compared 
with  that  paid  by  the  First  Teller,  and  it  is  confined 
to  receivins:  them  in  account.  It  does  not  extend 
to  the  actual  disbursement  of  gold  or  bills  to  the 
applicant. 

There  are  times  when  the  Paying  Teller  would 
seem,  to  an  outside  observer,  to  be  almost  helpless 
against  threatened  losses. 

It  is  one  of  those  "  panic  days"  on  which  men  are 
driven  to  desperation  by  the  utter  failure,  one  after 
another,  of  all  their  resources.  Employers  as  well  as 
clerks  are  seen  hurrying  along  the  streets  to  borrow, 
or  to  beg  a  respite  from  their  obligations.  Merchants 
who  were  never  known  to  be  "  short"  before,  are  now 
seen  to  enter  the  bank  in  great  agitation,  and  after 
fruitless  intercession  with  the  ofiicers,  to  go  out  again 
with  hopelessness  and  discredit  impressed  in  every 
feature.  The  President  and  Cashier  themselves  mani- 
fest extreme  anxiety.  All  the  counters  are  thronged 
by  dealers  in  a  high  state  of  excitement.  The  clerks 
are  deeply  engrossed  in  examinations,  mutual  in- 
quiries and  messages,  hurrying  from  desk  to  desk, 
amidst  the  general  confusion  of  voices,  the  rattling  of 
specie  and  the  perpetual  reverberation  of  banging 
doors.  There  is  a  prevalent  sense  in  the  bank  of 
apprehension  and  alarm.  But  the  Teller  goes  on 
impassively  with  his  certifications  and  payments,  not 
sufiering  himself  to  be  flurried  by  what  passes  around 
him,  and  exhibiting  not  the  slightest  discomposure 
of  manner. 


A   FAILURE.  147 

The  Cashier  lays  an  open  note  on  liis  desk : 

"  Cashier  Coivimercial  Bank  : 

"  Dear  Sir  :  Please  certify  no  more  notes  of  our 
firm  after  receipt  of  this.     Mar.  4,  2^  P.M. 

"  Yours,  respectfully,  Skarem  &  Co." 

"  Too  late,  sir.  I  have  already  certified  forty  thou- 
sand dollars!" 

"  The  deuce  you  have  !" 

"Yes,  sir — but  they  are  honorable  men.  I  have 
no  doubt  they  will  protect  the  bank." 

More  notes  of  Skarem  &  Co.  are  brought  in  for  cer- 
tification. 

"  Ko  funds  to  pay  those  notes." 

"  F7ta«5  do  you  say?" 

"  I  have  a  written  notice  not  to  certify  any  more 
of  their  paper." 

The  messenger  hurries  off  to  communicate  the 
intelligence  to  the  officers  of  his  own  bank.  It  has 
already  found  currency  in  "  the  street,"  and  the  num- 
ber of  firms  heretofore  in  good  standing,  that  are 
seriously  involved,  is  a  subject  of  free  speculation. 
The  liabilities  of  "  Skarem  &  Co."  are  variously  stated 
at  from  two  to  five  millions  of  dollars,  and  all  the 
probable  consequences  of  their  failure  are  exaggerated 
by  public  rumor. 

Three  o'clock.  The  Paying  Teller  closes  his  gate. 
A  few  straggling  notes  and  checks  for  certification 


148  THE  PAYING  TELLER. 

concludes  the  day's  business,  and  leaves  him  at  liberty 
to  look  after  the  indulged  accounts.  A  string  of 
twenty  depositors  yet  wait  their  turn. 

Skarem  &  Co.  have  made  a  deposit  sufl£cient  to 
cover  all  their  certifications;  but  the  Teller  finds 
that  "Wilkins  &  Smith,  for  whom  he  had  certified  near 
seventy  thousand  dollars,  have  not  yet  made  their 
account  good.  He  is  alarmed,  and  communicates  the 
fact  to  the  Cashier.  While  they  are  in  consultation, 
the  clerk  of  Wilkins  &  Smith  hands  in  their  book 
with  twice  the  required  amount  of  funds. 

"That,"  says  the  Teller,  with  manifest  relief, 
"  makes  us  right  for  the  day." 

EXPLANATION   OF  THE  PAYING   TELLEk's   PROOF. 

The  business  of  the  day  begins  with  the  balance  of 
cash  on  hand,  $3,100,728.37. 

The  money  received  on  the  previous  day  by  the 
Deposit  and  the  ISTote  Teller  (here  called  second  and 
third)  consists  of  three  kinds  of  funds :  office  notes, 
specie,  and  exchange  funds.  All  must  be  added  to 
the  above  balance. 

The  title  "  Commercial  Bank"  is  adopted  to  sim- 
plify the  explanation  of  some  tenns. 

Office  Notes  means,  the  bills  of  the  Commercial  Bank 
in  distinction  from  those  of  all  other  banks.  Uncur- 
rent  bank  bills,  and  checks  that  cannot  be  used  in  the 
Exchange,  are  classed  under  the  same  head,  and  con- 
stitute the  Office  List. 

The  items  numbered  1,  2,  3,  and  4,  are  the  unex- 
changeable portion  of   the   funds,   and  with  some 


PAYING  TELLER  S   PROOF. 


149 


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150  THE  PAYING  TELLEK. 

exceptions,  are  incorporated  in  the  Paying  Teller's 
general  cash.  The  items  5  and  6,  make  the  Clearing 
House  Exchange,  amounting  to  $878,058.02. 

The  checks  that  are  added  from  the  morning  letters 
must  be  credited  to  the  remitters  on  the  books  of  the 
Third  Teller,  and  are  transferred  hj  him  to  the  Pay- 
ing Teller— $91,876.18. 

The  exchange  received  from  the  Clearing  House  in 
retm-n  for  that  sent  to  it  — number  8,  $870,463.27, 
completes  the  entire  amount  of  the  Paying  Teller's 
cash— $4,997,745.43. 

The  payments  are  as  follows : 

TTie  exchange  sent  to  the  Clearing  House,  which  is 
the  precise  amount  of  the  items  5,  6,  and  7,  on  the 
other  side  of  the  account— number  9,  $969,934.20. 

Numbers  10  and  11  are,  respectively,  portions  of 
the  items  numbered  1,  and  2,  returned  to  the  Second 
and  Third  Tellers.  They  may  consist  of  country 
checks,  or  checks  that  remain  unpaid  for  some  cause, 
or  uncurrent  bank  bills,  the  responsibility  of  convert- 
ing which  into  exchangeable  funds  belongs  to  the 
Tellers  who  received  them,  and  not  to  the  Paying 
Teller. 

I^umber  12,  is  the  whole  amount  of  the  dealers' 
checks  paid  in  this  department  during  the  day. 

The  sum  of  these  payments  being  subtracted  from 
the  footing  of  the  opposite  side  of  the  account,  calls 
for  the  balance  in  cash  of  $2,996,504.12. 

So  much  for  the  books. 

The  Paying  Teller  now  counts  up  all  the  office 
notes,  or  bills  of  his  own  bank,  by  denominations,  and 
finds  them  to  be  $140,843.    He  has  redeemed  bills  of 


EXAIIINATION   OF   CASH.  151 

corresponding  banks  to  the  amount  of  $9786.  He 
counts  over  the  specie  (that  in  the  vault  by  bags  or 
certificates),  and  on  adding  these  sums  together,  finds 
the  whole  to  agree  with  the  Proof. 

If  there  is  a  discrepancy,  he  mostly  discovers  it  by 
revision.  Errors  of  surplus  or  deficiency  that  cannot 
be  explained,  must  be  marked  on  the  Proof,  and 
reported  to  the  Cashier.  Their  solution  may  come 
about  by  accident  after  the  lapse  of  weeks  or  months. 

The  short  summary  marked  B.  is  the  most  import- 
ant statement  in  the  whole  history  of  the  business. 
It  is  exclusively  in  the  keeping  of  the  Paying  Teller, 
is  out  of  the  reach  of  all  the  examinations  and  tests 
of  the  general  accounts  of  the  bank,  and  no  clerk  has 
any  necessity  or  right  to  look  into  it.  The  President, 
the  Cashier,  or  a  committee  of  the  Board  of  Directors 
may  investigate  it  when  they  think  proper  ;  but  they 
rarely  do  it  with  any  thoroughness — the  President  or 
Cashier  perhaps  not  once  in  twelve  months.  In  some 
banks,  the  Board  of  Directors  is  divided  into  standing 
committees  of  three  or  four  members  each ;  and  these 
committees  rotate  as  examiners  for  stated  periods. 
In  others,  special  committees  are  appointed  for  the 
service;  but  not  one  bank  director  in  twenty  has 
enough  practical  acquaintance  with  accounts  to  give 
real  value  to  his  certificate  of  accuracy.  All  the 
bank  frauds  that  have  been  perpetrated  in  l^ew  York 
have  been  carried  through  repeated  directorial  exam- 
inations, and  not  one  within  the  author's  knowledge, 
has  ever  been  discovered  by  them.  Discovery  has 
almost  uniformly  been  the  result  of  accident,  of  self- 


152  THE   PAYING   TELLEK. 

conviction,  or  of  unmanageable  magnitude  in  the 
default.  The  methods  of  concealment  in  the  hands 
of  a  skillful  clerk,  are  too  many  and  too  intricate  to 
be  detected  by  common  scrutiny. 

A  better  method  is,  for  the  Cashier  to  select  two  or 
three  intelligent  clerks  who  are  not  connected  with 
the  Paying  Teller's  department,  to  assist  him  in  the 
examination.  This  is  the  practice  of  several  banks 
which  are  under  the  best  discipline. 

The  office  list  in  this  statement  has  frequently  been 
used  to  cover  the  embezzlement  and  misuse  of  funds. 
Under  the  specification  of  "sundries,"  or  "  cash  items," 
or  "mutilated  bills,"  any  deficiency  could  be  con- 
cealed. The  Teller  may  carry  on  false  figures  for 
years,  and  no  after-examination  could  prove  them 
false. 

The  office  list  has  also  been  used  by  bank  officers 
to  conceal  their  improper  application  or  abstraction 
of  funds.  The  President  or  Cashier  may  make  loans 
on  "  traps,"*  seal  them  up,  mark  on  them  a  fictitious 
value,  and  instruct  the  Teller  to  "  put  them  in  the 
office  list."  Such  abuse  is  not  discoverable  by  the 
Teller.  He  commonly  obeys  the  instructions  of  the 
officers  without  inquiry,  and  may  thus  be  made  the 
involuntary  instrument  of  fraud.  In  case  of  discov- 
ery he  would  be  held  blameless.  But  with  just  views 
of  his  own  duty  and  responsibility,  he  might  object  to 
receiving  from  the  President  or  Cashier,  any  sealed 
securities  or  vouchers  to  be  counted  as  funds.    If  they 

♦  This  is  a  common  term,  signifying  uncommercial,  and  worthless  documents, 
Buch  as  depreciated  railroad  bonds,  land  grant  bonds,  railroad  acceptances,  bad  or 
accommodation  notes,  broken  stocks,  &c. 


CERTinCATIOK.  163 

should  offer  him  securities  of  an  improper  kind,  it 
would  be  his  right  and  duty  to  refuse  them;  nor 
would  any  bank  officers  dare  resent  such  refusal. 

The  modern  improved  discipline  of  banks,  together 
with  the  various  legal  reports  of  their  condition,  has 
lessened  the  facility  of  fraud  by  the  office  list.  Large 
sums  under  the  head  of  "  sundries  "  or  "  cash  items," 
are  regarded  with  distrust. 

The  substitution  of  copper  for  gold  in  the  sealed 
bags  is  a  very  hazardous  experiment,  and  yet  it  has 
occasionally  been  resorted  to  with  success  by  a  dis- 
honest Teller.  The  difference  in  bulk  of  the  same 
weight  of  gold  and  copper  would  be  too  obvious  to 
the  experienced  eye  of  the  Porter,  to  escape  detec- 
tion ;  and  the  difference  in  weight  of  the  same  bulk 
would  be  discovered  in  the  handling  of  it. 

Certification  is  the  most  dangerous  and  least 
guarded  function  of  any  person  connected  with  the 
bank,  whether  officer,  director,  or  clerk.  It  is,  in 
fact,  the  power  of  bank  issue  ;  and  it  is  vested  exclu- 
sively in  the  Paying  Teller.  By  simply  writing  his 
name  across  the  face  of  a  check,  he  gives  it  the  cred- 
ibility of  an  official  bank  draft.  He  can  do  this  at 
his  own  house  as  well  as  at  the  bank  counter,  and  for 
people  who  keep  no  account  with  the  institution  as 
well  as  for  those  who  do. 

The  use  of  the  Certification  Check  List,  is  to  pre- 
vent dealers  overdrawing  their  accounts  by  the  dupli- 
cation of  checks.  It  cannot  prevent  the  Teller  from 
certifying  beyond  the  record. 

The  Paying  Tellers  of  New  York  disburse  daily 
near  twenty-five  millions,  and  in  the  course  of  a  year 

1* 


154:  THE  PAYING   TELLER. 

eight  or  ten  thousand  millions  of  dollars  ;  and  the 
aggregate  of  all  losses  incurred  through  them  by 
mistakes  or  by  abuse  of  trust,  is  not,  at  the  highest, 
as  much,  perhaps,  as  the  one  ten-thousandth  part  of 
one  per  cent !  This  is  strong  testimony  in  favor  of 
theii'  general  fidelity  as  a  class,  in  view  of  the  exten- 
sive powers  with  which  they  are  intrusted ;  and 
especially,  in  view  of  the  power  of  certification,  which 
in  the  manner  of  its  use  up  to  the  present  day,  has 
been  without  any  other  protection  than  their  own 
sense  of  propriety  and  honor. 

Various  changes  have  been  proposed  by  bank  offi- 
cers in  the  method  of  certification.  When  an  example 
of  its  abuse  is  made  known,  the  subject  is  freely  dis- 
cussed by  them,  and  it  is  felt  to  be  the  weakest  and 
most  unguarded  point  in  our  banking  system.  Some 
institutions  have  adopted  a  stamp  in  red  or  blue  ink 
to  accompany  the  signature  of  the  Teller ;  but  the 
stamp  could  be  duplicated  or  secretly  used  without 
difficulty.  Others  have  proposed  to  conjoin  the  sig- 
nature of  another  clerk  with  that  of  the  Paying 
Teller  ;  and  others,  to  create  a  certifying  department 
with  an  exchange  issue  of  checks. 

The  plain  truth  is,  that  the  power  of  certification  is 
too  easily  abused,  and  too  destructive  in  its  abuse,  to 
be  vested  in  single  hands,  without  effectual  super- 
vision. 

The  following  example  shows  how  checks  fraud- 
ulently certified  may  be  kept  alive  from  day  to  day, 
and  assist  a  large  default,  without  causing  any  irregu- 
larity in  the  books  of  a  bank,  and  without  exciting 
the  suspicion  of  the  officers  and  clerks. 


AN   EXAMPLE.  155 

The  Paying  Teller  began  by  certifying  a  check  in 
advance  of  the  dealer's  deposit ;  and  on  the  following 
day  certified  another,  that  it  might  be  negotiated,  and 
the  means  thus  obtained  to  remove  the  first  out  of 
sight;  to  provide  for  the  second,  a  third  was  certi- 
fied, and  so  continuously  on,  the  negotiations  of  one 
day  furnishing  the  means  to  redeem  the  checks  of  the 
day  before.  The  amount  was  gradually  increased, 
until  twelve  or  fifteen  checks,  for  amounts  between 
four  or  five  thousand  dollars  each,  were  afioat  in  the 
various  channels  of  negotiation.  They  were  drawn 
for  irregular  sums,  that  they  might  wear  a  business- 
like appearance.  JS'o  entry  of  them  was  made  on  any 
of  the  books,  and  no  apparent  deficiency  was  caused 
in  the  Teller's  daily  cash.  An  examination  of  his 
statement,  similar  to  that  marked  B,  on  page  149, 
would  have  developed  no  clue  to  the  fraud, 
which  consisted  entirely  of  floating  certifications. 
There  were  two  confederates  in  the  plan — one  a 
dealer  in  the  bank,  and  the  other  a  broker  whose 
account  had  been  closed  for  irregularity  several 
months  before  the  exposure  came  about.  As  the 
fraud  could  be  maintained  only  by  a  complete  daily 
renewal  and  negotiation  of  the  whole  of  it,  the  three 
met  in  the  evening  at  the  office  of  the  broker,  and 
the  Teller  was  advised  of  the  banks  in  which  the 
checks  had  been  deposited,  so  that  he  could  lay  aside 
those  particular  exchanges  in  the  morning,  and  thus 
prevent  them  from  passing  into  the  hands  of  the 
Assistant  Teller.  It  was  then  also  ascertained  what 
amount  of  checks  must  be  negotiated  on  the  following 
day,  and  they  were  written  by  the  confederates,  and 


156  THE  PAYING   TELLER. 

then  certified  by  the  Paying  Teller.  Subsequent 
developments  proved  that  this  process  had  been  car- 
ried on  for  many  months,  the  amount  gradually 
increasing  until  it  reached  seventy-five  thousand  dol- 
lars. There  had  been,  in  the  mean  time,  five  or  six 
examinations  by  committees  of  the  Directors,  and  the 
usual  certificate  of  accuracy  in  the  accounts  was 
recorded. 

TJie  Teller  who  perpetrated  this  fraud  was  a  very 
accomplished  clerk.  His  self-possession,  when  all 
around  him  was  excitement  and  hurry,  seemed  to 
increase  with  the  emergency.  He  manifested  an 
extraordinary  faculty  for  detecting  the  slightest  indi- 
cations of  fraudulent  or  dishonorable  purposes  in 
others ;  and  the  bank  owed  to  him  many  fortunate 
escapes  from  loss  by  the  various  tricks  and  imposi- 
tions which  are  practiced  by  dealers  in  extremity. 
To  all  these  qualifications,  he  added  such  diligent 
habits  of  business  as  to  attract,  in  an  unusual  degree, 
the  personal  attention,  respect,  and  confidence  of  every 
director,  as  well  as  of  the  ofiicers  of  the  institution. 
It  was  subsequently  found  that  he  had  been  a  regular 
attendant  at  a  gambling-house,  even  before  his  appoint- 
ment as  Teller.  Tlie  discovery  of  his  fraud  caused  an 
immediate  examination  into  the  accounts  of  many 
other  Tellers  in  the  city  banks.  In  two  cases  each, 
a  deficiency  of  more  than  one  hundred  thousand 
dollars  came  to  light,  and  in  a  third,  one  of  seventy 
thousand. 

Fraud  and  collusion  may  always  be  presumed  from 
the  use  of  certified  checks  as  collateral  security  for 
loans.    There  can  be  no  honest  reason  for  not  draw- 


AN  EXAMPLE.  157 

ing  the  money  for  them,  as  they  are  charged  to  the 
account  of  the  dealer  when  they  are  certified,  and  lie 
— not  the  holder  of  the  checks,  is  the  man  who  must 
pay  them.  In  fact,  they  are  already  paid.  The  hypo- 
thecation of  certified  checks  is  like  the  hypotheca- 
tion of  gold ;  and  when  one  deposits  gold  as  secur- 
ity, agreeing  to  pay  interest  on  it,  the  presumption 
is,  that  it  is  a  surreptitious  transaction.  Tlie  only 
possible  excuse  would  be,  an  expected  advance  of 
premium  enough  greater  titan  the  interest,  to  jus- 
tify the  hoarding.  Ko  dealer  in  money  is  so  igno- 
rant as  not  to  know  these  facts.  A  broker  who 
receives  certified  checks  as  collateral  security  for 
loans,  becomes  a  party  to  the  fraud,  because  the  tacit 
if  not  the  expressed  condition  is,  that  he  shall  with- 
hold them  from  the  bank. 

The  Paying  Teller,  to  a  considerable  extent,  holds 
in  his  hands  the  commercial  fate  of  the  merchant,  in 
the  power  to  certify  checks.  He  is  therefore  likely 
at  times  to  be  tempted  and  embarrassed  by  personal 
relations.  Old  companions  and  friends  are  shaken  by 
the  financial  storm,  but  he  must  prefer  his  own  duty 
to  their  interest.  He  must  be  unapproachable  by 
bribes  of  feehng,  as  well  as  of  money.  His  greatest 
danger  is  in  the  first  exception  to  rules,  which  draws 
after  it  a  second  exception.  A  Teller  of  one  of  our 
city  banks  once  made  the  following  confession  to  the 
author : 

A  personal  friend  and  a  highly  respectable  mer- 
chant called  at  the  bank  after  three  o'clock,  and 
requested  him  to  certify  his  check  for  six  thousand 


158  THE  PAYING   TELLER. 

dollars.  He  represented,  that  by  paying  off  a  loan 
for  that  amount,  he  would  release  collaterals  which 
he  had  already  negotiated  for  nine  thousand  dollars, 
and  that  he  would  deposit  the  latter  sum  within  half 
an  hour,  thus  making  his  check  good.  After  a  long 
resistance,  the  Teller  yielded — not  to  the  merchant, 
but  to  the  friend,  on  the  express  condition  that  the 
check  should  be  used  for  no  other  purpose.  He  was 
met  on  the  way  to  redeem  his  promise,  by  a  creditor, 
who  overcame  his  purpose  by  the  force  of  a  superior 
will,  and  obtained  from  him  the  certified  check. 
Finding  that  the  borrower  did  not  return,  the  Teller 
became  alarmed.  He  had  delayed  charging  the  cer- 
tification until  the  deposit  should  be  brought  in,  and 
now  withheld  it  to  avoid  inevitable  exposure  on  the 
following  morning,  and  consequent  dismissal  and  dis- 
grace. After  a  week's  labor  and  suspense,  during 
which  he  suffered  the  most  painful  anxiety,  and  with- 
held the  check,  he  secured  the  money,  and  then  in- 
formed the  officers  of  the  transaction.  They  were 
satisfied  that  the  lesson  would  make  him  more  watch- 
ful in  future,  and  their  confidence  in  him  was  rather 
improved  than  abated. 

The  Paying  Teller  is  the  natural  successor  in  office 
to  the  Cashier — a  very  influential  consideration  to 
make  him  deserve  the  good  opinion  of  the  Directors, 
and  the  esteem  of  the  public. 

He  generally  proves  his  cash  within  half  an  hour 
after  three  o'clock.  The  Porter  assists  him  in  carry- 
ing his  trunks  and  trays  into  the  vault,  which  he  locks, 
and  with  the  key  in  his  pocket,  leaves  the  bank  for 
the  day. 


THE  DEPOSIT  TELLER.  159 


CHAPTER   Y. 

THE     DEPOSIT     TELLEE. 

CE  accounts  of  a  bank  are  divided  into  two  classes, 
known  as  indimdual  and  general. 

The  former  are  personal,  belonging  to  individuals 
or  firms.  The  latter  are  those  of  other  banks,  and  such 
as  show  the  aggregates  or  results  of  the  business ;  as 
Stock,  Expenses,  Bills  Discounted,  Profit  and  Loss, 
Cash,  Interest,  Exchange,  and  some  others. 

The  original  entries  of  the  former,  called  Indi- 
vidual Deposits,  are  made  by  the  Deposit  Teller,  and 
the  latter  by  the  Note  Teller.  The  I^ote  Teller  also 
receives  the  money  paid  in  for  notes  lodged  for  col- 
lection on  personal  account.  Both  of  these  clerks  are 
Receiving  Tellers,  and  are  distinguished  also  as 
Second  and  Third  Tellers,  in  the  order  named,  from 
the  rank  which  they  hold  with  respect  to  promotion. 
If  the  place  of  the  Pirst  or  Paying  Teller  becomes 
vacant,  the  Second  or  Deposit  Teller  takes  it,  and  he 
is  succeeded  by  the  Third,  or  iN^ote  Teller,  the  quali- 
fications of  the  clerk  in  each  case  being  undisputed. 

The  duty  of  the  Deposit  Teller  is  to  receive  all 
direct  deposits  of  money  brought  by  the  individual 
dealers  of  the  bank.  The  book  in  which  he  enters 
these  is  called  the  Second  Teller's  Cash-book.  "While 
in  use,  it  lies  open  before  him  on  the  desk,  with  such 


160  THE  DEPOSIT  TELLER. 

conveniences  of  blotting-paper,  pencils,  eraser,  and 
India-rubber  as  may  be  required.  There  are  com- 
monly two  of  these  Cash-books  open  at  the  same  time, 
for  alternate  use  by  the  Teller  and  the  Book-keepers. 
They  have  the  same  rulings  precisely  as  the  Certifica- 
tion check-list,  on  page  115.  The  name  of  the  depo- 
sitor, and  the  amount  of  his  deposit  in  the  first 
column,  is  the  Teller's  original  entry,  corresponding 
in  the  figures  with  that  which  he  makes  in  the  Dealers' 
Bank-book.  A  form  of  the  Bank-book  is  given  on 
page  161.  It  is  the  Teller's  receipt  to  the  latter  for 
his  deposits.  The  letter  A  is  the  initial  of  his  name, 
and  identifies  the  receiver  of  the  money.  The  exam- 
ple shows  a  succession  of  deposits,  and  other  entries, 
which,  with  the  extension  columns  of  the  Second 
Teller's  Cash-book,  will  be  more  appropriately  ex- 
plained under  the  head  of  Book-Tceejpers. 

The  deposits  of  merchants  consist  of  bank  bills, 
coin,  personal  and  bank  checks,  certificates  of  depo- 
sit, and  other  documents  which  represent  money. 
The  dealer  is  required  to  state  them  in  detail  as  in 
the  form  on  page  161.  The  banks  generally  furnish 
printed  tickets  with  blank  spaces  for  the  name  of  the 
dealer  and  the  figures.  These  are  not  only  a  help 
to  the  Teller,  with  whom  small  economies  become 
great  gains,  but  to  the  depositors  also,  many  of  whom 
stand  in  need  of  instruction  as  to  order  and  system  in 
their  accounts.  They  may  commit  any  number  of 
mistakes  in  their  cash-book  at  home,  but  the  tickets 
will  always  set  them  right  with  respect  to  their  depo- 
sits in  bank.  The  Teller  will  not  receive  money 
without  them.     If  his  cash  does  not  prove  at  the  end 


DEALER  S   BANK-BOOK   AND   DEPOSIT  TICKET. 


161 


FORIS-I    OF    IDE-AJLEIl'S    B-A-TsT^C-BOOK:. 


Dr. 


The  Commercial  Bank  in  afc  with  Slater  &  Co. 


Cr. 


1856 
June 


July 


14 


To  Cash, A 

"      "     A 

"      "     A 

"      "     A 

"      "     A 

"      "     A 

"      "     A 

"  Bills  discounted 

"Jones     2,500 
jones,         J2.50 


"  Brown 

"Cash, A 


To  Balance . 


30,000 
19,240 

6,352 
10,051 

1,275 
21,000 
17,001 
22,363 


2,487 
1,625 
1,000 


132,396 


18,819 


60 


50 


40 


84 


June 


July 


By  Cash 


Balance, 


960 
14,240 
30,000 

2,240 

500 

15,045 

25,000 

16,840 

8,750 
18,819 


132,396 


15 


76 


84 


40 


DEPOSIT   TICKET. 

H 

o                   O         <M 

o 

c> 

) 

O                   »0         £- 

u 

5 

^ 

3 

m 

VO 

o       .- 

W5       o       O       o       e< 

O 

GO 

lO           T 

lO              Tit              T 

o      r- 

o 

«©    (M 

CD          C3          £-          O          C 

o 

h^ 

■^ 

i-H       O       c^       «3       or 

o 

CO 

H 
O 

^ 

■^ 

■si 

S 

«« 

s; 

S 

^ 

Q 

^^ 

^ 

O 

^ 

^ 

'— 

s 

0 

in 

^^ 

en 

o- 

o 

-a     "S 

^ 

ZT 

d        a 

m 

c3         O 

-  g 

162 


THE  DEPOSIT  TELLER. 


of  the  day,  he  re-examines  them,  first  by  comparison 
of  their  footings  with  tlie  book  entry,  and  then  by 
checking  off  each  item,  and  revising  the  additions. 
They  enable  him  to  trace  and  identify  all  the  checks 
on  other  banks,  and  so  assist  liis  memory  that  he  can 
recall  most  of  the  transactions  of  the  day.  After 
proving  his  cash,  he  rolls  them  into  a  compact  bundle, 
marks  the  date  on  the  cover,  and  puts  them  away  for 
futm*e  reference,  in  case  of  necessity. 

The  Exchange  Drawer  is  a  drawer  divided  into  as 
many  boxes  as  there  are  banks.  The  bills  and  checks 
of  each  bank  are  separated  by  distribution,  each  kind 
in  its  own  box.  The  following  example  shows  a  com- 
plete list,  excepting  in  the  length  of  it,  which  is  about 
eight  inches.  It  is  a  statement  of  all  the  bills  and 
checks  of  the  Mechanics'  Bank,  received  by  the  Com- 
mercial Bank  during  one  day. 


COMMERCIAL    BANK,    JUNE  18,    1855 


$ 

c. 

1,550 

640 

72 

6,284 

26 

1,000 

275 

46 

160 

16 

1,546 

90 

2,500 

4,542 

60 

2,740 

65 

*21,240 

75 

*  See  this  amount  transferred  to  the  Proof,  on  page  163 — ISo.  i. 


THE  PEOOF  LIST.  163 

Every  "bank  in  the  city  has  one  such  list  against 
every  other  bank ;  that  is,  fifty-two  lists,  its  own  Office 
List  making  the  fifty-third.  When  the  footings  of 
these  fifty-two  are  copied  on  a  general  list,  called 
The  Second  Teller's  Proofs  and  added  together,  they 
constitute  the  Deposit  Teller's  portion  of  the  Exchange 
which  goes  to  the  Clearing  House.  It  appears  in  gross 
on  the  Paying  Teller's  Proof  of  the  next  morning,  as 
a  part  of  his  receipts,  as  on  page  149,  $554,982.99. 


SECOND    TELLER'S    PROOF. 
June  ISih,  1855. 

1  Bank  of  New  York $21,154.4:2 

2  Manhattan  Company 15,000.00 

3  Merchants' Bank 30,150.75 

4  Mechanics'  Bank 21,240.75 

5  Union  Bank 10,142.14 

6  Bank  of  America 14,972.16 

1  Phenix  Bank 11,&43.60 

8  City  Bank 16,800.19 

9  North  River  Bank 

10  Tradesmen's  Bank 5,204.17 

11  Pulton  Bank 6,315.90 

12  Chemical  Bank 14,510.80 

13  Merchants'  Exchange  Bank 18,260.01 

14  National  Bank 16,210.40 

1 5  Butchers'  &  Drovers'  Bank 1 ,745.00 

16  Mechanics'  &  Traders'  Bank 4,520.72 

17  Greenwich  Bank 7,240.65 

18  Leather  Manufacturers' Bank 16,762.40 

19  Seventh  Ward  Bank 7,265.10 

20  Bank  of  the  State  of  New  York 27,566.70 

21  American  Exchange  Bank 41,317.62 


164:  THE  DEPOSIT  TELLER. 

22  Mechanics'  Banking  Association $1,500.26 

23  Bank  of  Commerce 27,005.16 

24  Bowery  Bank (Suspended.) 

25  Broadway  Bank 8,142.10 

26  Ocean  Bank 5,740.00 

27  Mercantile  Bank 4,960.11 

28  PacificBank 1,950.00 

29  Bank  of  the  Republic 18,100.05 

30  Chatham  Bank 1,750.82 

31  People's  Bank 1,200.06 

32  Bank  of  North  America 16,200.60 

33  Hanover  Bank 1,850.00 

34  Irving  Bank 3,200.00 

35  Metropohtan  Bank 38,716.94 

86  Citizens'  Bank 1,325.60 

38  Grocers'  Bank 1,300.02 

40  Nassau  Bank 6,240.14 

41  East  River  Bank (Suspended.) 

42  Market  Bank 15,270.66 

43  Saint  Nicholas  Bank 1,201.10 

44  Shoe  and  Leather  Bank 14,964.10 

45  Corn  E.\change  Bank 6,317.69 

47  Continental  Bank 12,572.64 

48  Bank  of  the  Commonwealth 9,214.00 

49  Oriental  Bank 1,625.60 

50  Marine  Bank 1,100.16 

52  Atlantic  Bank 2,560.08 

63  Importers'  &  Traders'  Bank 22,540.13 

54  Park  Bank 19,378.96 

65  Artisan's  Bank 1,842.65 

$554,982.99 

Office  List 13,938.71 

Specie 3,884.95 

Checks 64,387.92 

$637,194.57 
Footing  of  Cash  Book 637,194.57 


BEHIND  THE  MACHINEET.  165 

The  foregoing  list  presents  an  exact  proof  of  the 
cash  with  the  Deposit  Book. 

The  manner  in  which  the  several  items,  excepting 
the  checks,  are  incorporated  with  the  cash  of  the 
Paying  Teller,  may  be  seen  by  comparing  them  with 
the  entries  of  the  Proof  on  page  149.  The  item  of 
$64,387.92  is  the  amount  of  checks  on  the  Commer- 
cial Bank  itself,  and  they  are  charged  to  the  accounts 
of  the  drawers. 

It  is  not  unusual  for  depositors  who  receive  large 
checks  by  their  morning  letters,  to  send  them  to  the 
bank  for  addition  to  the  Exchange  before  it  is  dis- 
patched to  the  Clearing  House,  in  which  case  the 
Deposit  Teller  passes  them  over  to  the  Paying  Teller. 
This  would  require  some  additional  entries  at  the  foot 
of  the  Proof,  which  would  complicate  it  to  the  gen- 
eral reader. 

The  whole  duty  of  the  Deposit  Teller  is  performed 
when  he  finishes  this  Proof.  He  locks  up  the  fifty- 
three  packets  or  lists  of  money  in  a  trunk,  and  deposits 
it  in  the  vault,  when  he  is  at  liberty  to  leave  the 
bank,  which  he  does  mostly  from  half-past  three  to 
four  o'clock.  He  is  expected  to  be  at  his  post  in  the 
morning  in  season  to  deliver  his  Exchange  to  the 
Paying  Teller,  and  to  assist  in  the  incorporation  with 
it  of  the  Proof  List  of  the  Note  Teller. 

There  are  no  complex  calculations  in  the  accounts 
of  the  Deposit  Teller.  Simple  addition  and  subtrac- 
tion embraces  all  the  arithmetic  required.  It  is  the 
understood  rule  of  the  bank  to  avoid  needless  con- 
versation, and  to  never  speak  to  a  Teller  when  he  is 


166  THE  DEPOSIT  TELLEK. 

engaged  in  counting  money.  In  truth,  the  mere 
mechanical  performance  of  the  duties  of  -this  desk  is 
compatible  with  a  very  moderate  degree  of  intelli- 
gence. It  will  be  seen,  however,  on  looking  behind 
the  machinery,  that  a  dull  brain  might  easily  prove 
a  very  bad  investment  for  the  bank. 

By  far  the  larger  part  of  the  deposit  of  our  city 
banks  consists  of  merchants'  checks,  given  to  each 
other  in  payment  of  debts,  or  for  mutual  accommoda- 
tion. "Without  the  certification  of  the  bank  on  which 
they  are  drawn,  these  are  no  more  than  personal 
obligations,  of  the  validity  of  which  the  Teller  can 
have  but  little  knowledge.  The  stated  rule  is,  that 
they  must  be  certified  before  deposit ;  but  this  would 
be  attended  by  so  much  inconvenience  and  loss  of 
time,  that  it  is  relaxed  with  dealers  of  good  standing, 
who  are  supposed  to  be  responsible  for  any  that  may 
be  returned  dishonored,  and  who,  in  self-defence,  are 
not  likely  to  deal  with  unsafe  people.  And  so  it 
happens,  from  usage,  that  a  large  proportion  of  all 
checks  received  are  uncertified. 

Mr.  Tarbox  may  deposit  twenty  checks  amounting 
to  five  thousand  dollars.  They  may  be  drawn  on  as 
many  diflerent  banks,  and  it  may  take  one  or  two 
hours'  running  and  waiting  to  get  them  all  certified. 
The  Teller  has  no  definite  knowledge  of  the  personal 
responsibility  of  the  drawers ;  but  Mr.  Tarbox  him- 
self is  a  man  of  capital,  prudence,  and  honor.  He 
therefore  receives  the  checks,  although  he  knows  that 
they  will  be  drawn  against  immediately,  and  that  a 
day  must  elapse  before  they  will  reach  the  banks 
where  they  are  payable,  whence  any  of  them  that 


ABEL   DODGE.  167 

are  not  good  will  be  returned  to  him  for  redemption. 
It  is  not  nnlikely  that  one  or  two  of  the  twenty  may- 
be sent  back.  If  so,  they  are  immediately  presented 
to  Mr.  Tarbox,  who  pays  them  by  his  own  check. 
Tlie  Teller  might  have  recourse  to  his  account  in  the 
bank,  the  current  balance  of  which  is  probably 
sufficient  to  cover  them ;  but  this  would  be  leaving 
Tarbox  in  the  dark  as  to  the  dishonored  checks,  the 
collection  of  which  might  be  endangered  by  delay. 
Moreover,  if  not  apprized  of  their  debit  to  his  account, 
he  might  overdraw  that  by  his  own  checks.  It  is, 
therefore,  not  only  com-teous,  but  necessary  to  the 
safety  of  both  bank  and  dealer,  that  he  should  be 
advised  without  delay  of  any  default  in  the  checks 
that  he  deposits. 

Abel  Dodge  might  prove  to  be  less  honorable  than 
Mr.  Tarbox.  He  may  not  have  given  the  Teller  any 
reason  to  think  so  as  yet,  and  his  deposit  is  received 
in  the  same  way.  He  draws  his  own  check  for  the 
whole  amount  within  an  hour,  and  presents  it  for  cer- 
tification. K  the  Paying  Teller  should  want  confirm- 
ation of  the  deposit  having  been  made,  he  has  only 
to  ask  the  Book-keeper,  who  answers  in  the  affirma- 
tive ;  and  Dodge  thus  gets  his  own  check  certified, 
against  a  deposit  which  consists  of  the  uncertified 
checks  of  other  people.  If  the  latter  should  prove 
bad,  the  bank  can  have  recourse  only  to  Mr.  Dodge. 
To  trace  such  a  transaction,  we  may  suppose  one  of 
them  to  be  returned  from  the  bank  on  which  it  is 
drawn.  A  messenger  presents  it  to  the  Paying  Teller 
about  midday,  and  demands  the  money  for  it. 

"  Joseph  Pine's  check  not  good,  sir.  I'll  take  the 
gold,  if  you  please." 


168  THE  DEPOSIT  TELLER. 

It  is  paid,  and  passed  over  to  the  Deposit  Teller, 
who,  wishing  to  avoid  censure  for  unwatchfulness, 
sends  it  to  Mr.  Dodge  by  the  Porter,  with  instructions 
to  get  the  money  for  it.  The  Porter  returns,  with 
information  that  Dodge  has  failed,  and  can't  pay. 

"  Did  you  tell  him  it  was  a  debt  of  honor  ?" 

"  I  did." 

"  What  did  he  say  to  that?" 

"  Said  he  knew  it,  and  was  very  sorry,  but  could'nt 
help  himself.  "Would  be  very  happy  to  pay  it,  and 
wishes  he  had  the  means." 

"  That's  consoling.    Did  you  ask  him  about  Pine  ?" 

"Says  Pine's  failed  too." 

"  What  ?    Both  on  the  same  day  ?' 

"  So  it  seems." 

"  Hang  the  pirates !  I'll  go  and  see  'em  after  bank 
hours,  and  try  if  I  can't  squeeze  something  out  of 
'em." 

In  such  a  case,  the  Teller  may  prove  a  better  nego- 
tiator than  the  officers  of  the  bank.  If  he  should  be 
able  to  make  any  kind  of  arrangement  by  which  the 
bank  will  receive  final  payment,  he  submits  it  to  the 
Cashier  for  his  approval.  Otherwise,  he  has  the  morti- 
fication of  informing  that  officer  of  the  casualty,  and 
of  the  failure  of  his  attempt. 

Bank  officers  are  not  apt  to  be  censorious  when 
satisfied  with  the  general  method  and  accuracy  of 
the  Teller's  desk.  Tliey  know  that  losses  are  incident 
to  the  business.  But  if  they  are  of  frequent  occur- 
rence, or  if  they  manifestly  result  from  incapacity  or 
carelessness,  the  Teller  loses  his  place. 

An  accident  of  this  kind  stimulates  his  vigilance. 


KEFEEENCE   OF  DOTJETFUL  CHECKS   TO   CASHIEE.      169 

Like  small  misfortunes  in  any  business,  it  doubtless 
wards  off  larger.  He  looks  more  closely  into  the 
ledger  balances,  scrutinizes  with  a  sharper  eye 
accounts,  check,  and  persons,  and  consults  his  fears. 
Other  Able  Dodges  may  turn  up  any  day.  He 
enforces  his  rule  of  certification  with  more  vigor,  and 
perhaps  needlessly  in  many  cases,  giving  offence  to 
thin-skinned  dealers  and  lazy  clerks. 

"  Now,  where's  the  use  of  my  traipsing  all  over  the 
city  to  get  checks  certified,  when  I  know  they're 
good?" 

"  "Well — I  can't  help  it.  You  know  the  rule  of  the 
bank,  and  ought  not  to  require  me  to  break  it.  Here's 
one  large  check  of  five  thousand  dollars,  which  I  will 
not  take  on  my  own  responsibility.  If  you  get 
the  Cashier's  consent,  very  good.  I'll  take  the  rest  of 
your  deposit  to-day,  but  hereafter  you  must  get  all 
checks  over  a  thousand  dollars  certified." 

The  dealer  obtains  the  Cashier's  consent,  with  an 
admonition,  however,  that  it  is  better  to  observe  the 
rule  of  the  bank  than  to  give  the  Teller  an  oppor- 
tunity to  refuse  his  deposit.  If  he  has  any  doubt  of 
the  check  being  good,  or  of  the  ability  of  the  dealer 
to  redeem  it  if  bad,  he  refuses  at  once.  "  'Eo,  sir.  It 
is  the  Teller's  province  to  decide  that  point,  and  I 
will  not  interfere  with  him."  The  Teller  understands 
this  to  be  an  approval  of  his  course. 

The  risk  of  neglecting  certifications  falls  back  on 
the  merchant.  The  rule  of  the  bank  is,  therefore,  his 
best  protection,  and  should  be  appreciated  as  such, 
rather  than  be  deemed  offensive  to  credit  or  standing. 
Yet  it  is  not  unusual  for  a  dealer  or  his  clerk,  when 

8 


170  THE  DEPOSIT  TELLER. 

asked  why  he  does  not  get  his  check  certified,  to 
answer,  pettishly :  "  Because  there's  no  need  of  it. 
What  do  you  want  me  to  run  my  legs  off  for,  when 
'tis  no  use  ?" 

The  Teller  of  a  bank  may  have  reasons  which  are 
unknown  to  the  dealer,  for  requiring  certain  checks 
to  be  certified,  and  which  he  is  not  at  liberty  to  com- 
municate. Pie  may  have  received  the  same  from 
other  parties  to  such  an  amount  as  to  create  suspicion 
of  kiting.  This  is  the  most  vulnerable  part  of  his 
business — the  easiest  and  most  specious  method  of 
overdraft.  It  is  that  at  which  the  Able  Dodges  are 
sure  to  aim;  and  when  the  market  is  troubled,  the 
aim  is  frequent. 

It  is  the  Teller's  duty  to  keep  alive  and  always  fresh 
his  knowledge  of  the  general  state  of  accounts,  by 
asking  the  book-keepers  how  they  stand,  what  is  their 
average  "  run,"  and  so  forth ;  by  examining  the 
ledgers  in  person ;  inspecting  the  character  of  the 
deposits  and  checks,  just  as  the  Paying  Teller  does ; 
consulting  that  ofiicer ;  comparing  notes  and  experi- 
ences ;  clearing  up  doubts,  or  confirming  suspicions ; 
and  so  on,  incessantly.  In  fact,  he  has  much  to  do  in 
determining  the  character  of  the  whole  business.  K 
he  is  gifted  with  brains,  vivacity,  patience,  and  a  civil 
spirit,  he  may  sift  out  the  wheat  from  the  chaff — 
separate  the  sheep  from  the  goats,  and  exert  a  most 
practical  influence  over  the  success  of  the  institution. 
A  conceited,  pompous  fool  (a  character  not  unknown 
in  the  Kew  York  banks)  repels  the  better  class  of 
customers  from  the  counter,  and  attracts  those  who 
are  not  above  flattering  him  one  day  to  cheat  him  on 
the  next. 


TELLER  EXPOSED  TO   FOKGEEY,  ETC.  171 

"  Why  do  you  reject  this  check  from  my  deposit." 

"  Can't  you  see,  without  asking  ?  "What  do  you  try 
to  walk  over  the  rules  of  the  bank  for,  putting  in 
uncertified  checks  ?" 

"  We  shall  not  draw  against  our  deposit  within  five 
times  the  amount  of  that  check,  sir,  so  that  you  will 
run  no  risk  by  taking  it.  Besides,  we  know  it  to  be 
good." 

"  Well,  I  don't ;  and  that's  the  point  to  be  settled 
here." 

Such  a  Teller  will  lose  business,  by  losing  the 
respect  of  dealers.  Clerks  tell  their  employers,  and 
the  contagion  of  disrespect  spreads.  It  is  less  com- 
mon, however,  to  meet  examples  of  this  kind  now 
than  it  was  formerly.  Civility  is  fovmd  to  be  a  com- 
mercial investment.  A  surly,  ill-mannered  Teller, 
would  be  complained  of  to  the  oflScers  or  directors, 
and,  if  found  incorrigible,  would  be  dismissed. 

The  Deposit  Teller  has  the  same  need  to  examine 
signatures,  indorsements,  dates,  and  other  peculiari- 
ties of  checks,  as  the  Paying  Teller.  Dealers  who 
are  entirely  honorable  and  above  practicing  imposition 
themselves,  may  be  imposed  on  by  others  with  frau- 
dulent or  kiting  checks.  The  name  of  the  depositor 
must  be  indorsed  below  all  others  on  the  back  of  each. 
In  the  hurried  reception  of  deposits,  he  takes  special 
cognizance  of  this  last  indorsement,  as  the  key  to 
discovery  if  any  thing  should  prove  wrong.  He  can- 
not always  examine  at  the  moment  the  whole  history. 
That  is  sure  to  be  done  at  the  counter  where  final 
payment  is  made,  and  the  error,  if  any,  comes  back 
thence  for  correction. 


172  THE  DEPOSIT  TELLER. 

Keclamations  between  the  banks  are  of  every  day 
occurrence.  A  check  is  dated  ahead,  or  the  date  is 
obscure,  or  omitted ;  it  lacks  an  intermediate  indorse- 
ment, or  is  indorsed  "  by  attorney,"  without  proof  that 
the  attorney  is  authorized  by  the  principal ;  the  filling 
up  in  the  body  does  not  correspond  with  the  figures, 
or  is  entirely  wanting.  Singular  as  it  may  seem,  a 
check  will  occasionally  slip  through  the  hands  of  a 
Teller,  without  signature:  he  recognizes  a  familiar 
style  of  writing,  and  the  absence  of  the  name  does 
not  arrest  his  attention. 

In  the  hurry  of  distribution,  checks  are  thrown  into 
the  wrong  box,  which  takes  them  to  the  wrong  bank. 
All  these  errors  come  back  to  be  corrected,  by  the 
same  channel  through  which  they  go  out.  New 
modes  of  error  are  turning  up  every  day.  No  Teller 
has  ever  yet  reached  the  end  of  them,  and  never  will, 
while  the  firm  of  Cunning,  Carelessness  &  Co.,  does 
half  the  world's  business. 

Merchants  frequently  keep  accounts  in  two  or  more 
banks.  They  draw  checks  on  one  to  deposit  in  an- 
other. This  is  a  mere  changing  of  balances ;  and  as 
nothing  is  easier  than  for  a  man  to  sign  his  own  name, 
the  Teller  regards  it  with  suspicion.  Unless  well 
satisfied  of  the  integrity  and  safety  of  his  dealer,  he 
insists  on  the  certification  of  all  such  checks.  The 
shifting  of  balances  is  sometimes  unavoidable  by  a 
merchant.  He  may  draw  on  one  bank  in  expectancy 
of  funds  which  he  designs  to  deposit  therein,  and  fail 
to  receive  them ;  in  which  case  he  writes  a  transfer 
check  on  another,  to  restore  his  balance. 

There  is  a  protective  feature  in  many  accounts 


KECOtTRSE  TO  COLLECTION  NOTES.  173 

which  keeps  the  bank  safe  against  overdrafts;  that 
is,  when  dealers  have  notes  deposited  for  collection. 
As  these  are  paid,  they  are  posted  to  the  credit  of 
their  owner,  and  may  make  up  his  deficit.  Bank 
oflBcers  will  sometimes  admit  temporary  overdrafts  in 
anticipation  of  the  maturity  of  collection  notes ;  or, 
what  is  better,  make  transient  loans,  holding  them  as 
collateral,  by  which  the  irregularity  of  overdraft  is 
avoided.  The  Deposit  Teller  takes  no  cognizance  of 
this  source  of  recuperation,  unless  he  finds  necessity 
to  resort  to  it. 

The  financial  connection  of  merchants  in  good 
credit  with  an  inferior  class,  tends  to  drag  the  former 
down,  and  to  confound  them  with  the  latter.  "  How 
comes  it,"  says  the  Teller  to  himself,  "  that  our  friend 
Blunt  is  getting  hooked  in  with  such  a  fellow  as 
Dodge?"  Blunt,  thenceforward,  becomes  himself 
subject  to  closer  scrutiny.  His  account  is  more  nar- 
rowly inspected ;  and  if  it  should  appear  that  there  is 
any  thing  like  an  established  connection,  he  sinks  a 
degree  in  commercial  standing. 

The  word  foreign  applies  to  banks  out  of  the  city. 
Most  of  the  ISTew  York  city  banks  receive  on  deposit, 
either  at  par,  or  at  a  small  rate  of  discount,  individual 
checks  on  banks  at  a  distance.  Merchants  in  Buffalo 
remit  their  checks  on  banks  in  that  city,  to  their 
creditors  in  IS^ew  York ;  and  here  they  are  received  as 
cash,  deducting  enough  to  cover  the  exchange  and  ex- 
penses of  collection.  They  may  be  returned  not  good 
after  several  days,  when  the  depositor  must  promptly 
redeem  them.  The  interval  between  their  deposit  and 
their  return,  is  long  enough  to  allow  the  dealer  to  close 


174  THE  DEPOSIT  TELLER. 

his  account  and  leave  the  bank  in  the  lurch.  It  fol- 
lows that  the  Deposit  Teller  is  practically  discounting 
paper  all  the  time.  The  aggregate  amount  of  checks 
in  transit  for  collection  may  often  reach  one  or  two 
hundred  thousand  dollars,  for  the  security  of  which, 
the  main  reliance  of  the  bank  is  on  his  judgment. 

Drafts  on  individuals  and  private  bankers  in  the 
city,  are  received  to  a  limited  extent,  in  deposits ; 
but  this  throws  on  the  bank  the  trouble  of  collecting 
them,  and  makes  it  responsible  for  indorsements  in 
which  it  has  no  interest.  Dealers  are  therefore 
mostly  required  to  collect  them  on  their  own  behalf. 

Tlie  ingenious  methods  of  counterfeiting  bank  bills 
by  photographic  and  other  processes  are  such  as  to  defy 
any  ordinary  powers  of  detection.  Besides  making 
entirely  spurious  bills,  there  are  many  tricks  of  altera- 
tion and  substitution  which  are  very  successfully  prac- 
ticed. A  genuine  plate  of  a  broken  bank  is  changed 
in  its  title  to  conform  to  some  existing  bank.  The 
lesser  denominations  of  bills  are  altered  to  the  higher 
— three  to  ten,  or  one  to  fifty.  The  ink  is  extracted 
chemically,  and  other  titles  and  figures  are  neatly  ex- 
ecuted with  a  pen.  The  genuine  dies,  stolen  from  the 
engravers,  are  imprinted  on  false  bills.  A  small  and 
difierent  portion  is  cut  out  of  each  of  ten  or  fifteen 
genuine  bills,  and  a  new  bill  made  of  the  pieces,  neatly 
pasted  together.  The  chances  of  success  in  these 
various  processes,  are  in  proportion  to  the  number  of 
difierent  kinds  of  bills  in  circulation.  The  notes  of 
near  two  hundred  banks  are  receivable  in  deposit  in 
New  York.  If  each  one  issues  six  denominations,  it 
gives  a  total  of  twelve  hundred  different  imprints. 


DETECTION   OF   SPURIOUS   BILLS.  175 

The  attention  of  the  Teller  is  not  so  much  directed  to 
confirm  the  genuineness  of  each  bill,  as  it  is  to  detect 
unusual  appearances — like  one  in  a  crowded  street, 
who  does  not  observe  common  peculiarities,  but  at 
once  distinguishes  a  man  in  Turkish  or  other  singu- 
lar costume.  But  he  might  often  be  deceived  by 
fraudulent  bills  m  his  rapid  counting,  were  it  not 
that  other  eyes  than  his  own  are  bent  upon  their  dis- 
covery. ISTo  sooner  is  a  counterfeit  launched  upon 
the  community,  than  some  one  of  the  several  thousand 
clerks  in  our  banks  and  brokers'  offices  detects  it,  and 
it  is  immediately  announced  in  the  public  papers, 
with  such  a  description  as  to  make  its  subsequent 
detection  easy.  He  has  another  guard  in  the  watch- 
fulness of  his  dealers,  who,  it  is  presumed,  will  not 
knowingly  present  spurious  bills.  ^Notwithstanding 
these  defences,  however,  he  is  always  on  the  alert. 
The  counterfeiter  employs  workmen  of  equal  skill 
with  those  who  produce  the  genuine  bill ;  and  although 
engravers  periodically  announce  a  new  improvement 
or  device  which  cannot  be  successfully  imitated,  they 
are  as  often  cheated  by  a  fao  simile  that  puts  them 
to  the  necessity  of  another  trial. 

The  Teller  acquires  an  instinctive  faculty  for  the 
detection  of  spurious  bills.  To  stand  by  and  observe 
him  counting,  it  might  be  supposed  that  he  could 
hardly  get  a  glimpse  of  each,  so  rapidly  do  they  jjass 
through  his  hands.  He  looks  as  if  he  were  trying 
how  many  times  he  could  strike  the  ends  of  his  fin- 
gers together  in  the  twentieth  part  of  a  second ;  but 
you  see  a  steady  stream  of  bills  issuing  beneath  them, 
and  gradually  gathering  into  a  pile. 


176  THE  DEPOSIT  TELLEK. 

There  goes  one  aside,  without  perceptible  pause  in 
the  swift  handling!  He  checks  the  item  on  the  list, 
and  with  his  right  hand  thrusts  the  pile  into  a  drawer, 
whilst  with  the  left  he  tosses  the  single  bill  back  to 
the  depositor. 

"Counterfeit — five  dollars  off!" 

He  makes  the  entry,  deducting  it  from  the  list, 
hands  the  book  to  the  dealer,  and  takes  the  next  in 
order,  in  which  there  is  a  package  of  mixed  denomi- 
nations of  several  hundred  dollars.  He  gives  it  a 
smack  on  the  counter  to  loosen  the  bills,  and  a  pecu- 
liar toss,  which  makes  them  fall  over  like  the  leaves 
of  a  book,  affording  an  instantaneous  glance  at  their 
ends.  His  eye  has  caught  in  that  instant  an  old 
acquaintance ! 

"  Where  did  you  get  that  altered  bill  ?"  he  asks  of 
the  customer,  meantime  counting — "  twenty,  thirty, 
fifty,  fifty-five,  sixty,"  and  on  he  goes  like  lightning. 
The  dealer  looks  astonished,  not  thinking  it  possible 
that  the  question  could  have  reference  to  a  bill  in  his 
money.  The  Teller  repeats,  without  ceasing  his  count 
for  an  appreciable  instant — "  one  twenty,  one  thirty, 
two,  five,  one  forty-five — say,  where  did  you  get  that 
altered  bill  —  sixty-five,  one  seventy,  eighty,  two 
thirty — that^''  he  says,  tossing  it  in  his  face — "  two, 
altered  to  ten — two  eighty-five,  two  ninety-five,  three, 
five,  ten — three  thirty-five — ten  off,  right."  And  the 
deposit  is  entered,  and  the  dealer's  book  is  returned 
before  he  knows  it,  and  the  Teller  is  in  the  midst  of 
another  count  for  the  next  customer  in  order. 

This  is  very  curious  to  an  inexperienced  observer. 
But  there  are  certain  well-known  spm-ious  and  altered 


CLAIMS   rOK   DIFFEKENOES.  177 

bank  bills  which  are  distinguishable  by  a  quick 
Teller,  as  readily  as  the  countenance  of  his  landlord 
who  approaches  to  ask  for  his  quarter's  rent.  Counter- 
feits in  general  have  their  run,  and  then  mostly  dis- 
appear. To-day,  it  is  a  new  ten,  with  which,  if  it  is 
a  close  imitation,  the  Teller  may  be  caught — but  only 
once.  He  studies  over  its  peculiarities,  comparing 
every  part  with  a  genuine  bill,  and  he  would  sooner 
mistake  a  parasol  for  a  hat  than  be  cheated  by  it 
again.  Next  week,  a  spurious  five  has  its  run,  and 
there  may  be  an  interim  of  a  month  before  another 
appears  on  the  stage.  The  bank  counter,  however, 
is  the  last  place  for  counterfeits  to  be  presented.  They 
are  generally  set  afloat  in  country  places,  or  among 
the  small  shops,  where  they  are  more  likely  to  escape 
immediate  detection.  A  few  days,  and  often  a  few 
hours,  is  enough  to  spread  the  alarm,  and  to  give  all 
the  peculiarities  of  the  forged  bill  to  the  public 
papers,  so  that  Bank  Tellers  are  apt  to  be  fore- 
warned. 

CLAIMS     FOK     DIFFEKENCES. 

"While  the  Deposit  Teller  is  pressed  with  the  cur- 
rent business  of  his  desk,  the  Paying  Teller  comes  to 
his  elbow,  and  waiting  for  a  pause,  shows  him  one  of 
his  Exchange  lists  of  the  day  before.  "  Claim  of 
twenty  dollars  short  in  that  item,"  says  he. 
"  Don't  believe  it.  Didn't  differ  a  cent." 
The  messenger  who  brought  the  list  from  the  claim- 
ing bank  speaks  up :  "  It  is  so,  you  may  depend  on  it. 
Mr.  Sharp  counted  it  himself,  and  is  very  positive." 


178  THE  DEPOSIT  TELLEK. 

"  Don't  care  if  he  is.  My  cash  was  right.  Did  he 
prove  his  exchanges  ?" 

"  Yes,  sir." 

""Well — give  my  compliments  to  Mr.  Sharp,  and 
tell  him  he'll  not  get  the  first  red  cent  of  his  twenty 
dollars  out  of  me."  ' 

Mr.  Sharp  may  find  his  cash  correct  at  the  end  of 
the  day.  Having,  as  he  supposed,  discovered  an 
error,  he  made  the  claim  at  hazard,  rather  than  allow 
the  proper  moment  for  so  doing  to  pass  without  it. 

A  specific  error  should  be  reported  to  the  bank  in 
whose  money  it  is  found — either  a  deficiency  or  sur- 
plus, with  equal  promptitude.  Formerly,  it  was  cus- 
tomary to  claim  the  deficit,  but  to  say  nothing  of  the 
excess  unless  it  was  called  for.  If  a  careless  Teller 
was  one  or  two  hundred  dollars  "  over,"  he  reserved 
the  amount  from  his  cash,  trusting  that  it  would  be 
claimed  by  the  bank  to  whom  it  belonged ;  and  if  not 
claimed,  it  made  a  loose  fund  without  an  owner,  thus 
opening  the  door  of  temptation.  But  the  explanation 
of  such  difi'erences  was  likely  to  be  forthcoming  at 
any  moment  within  one  or  six  months. 

The  customary  rule  has  been,  for  the  sending  bank 
to  admit  a  claim  of  deficiency  on  the  statement  of  the 
receiving  bank,  if  the  Teller's  proof  for  the  day  calls 
for  that  precise  amount.  This  gives  a  dishonest  Teller 
an  opportunity  to  abstract  money  from  the  exchanges 
of  another  bank.  He  has  only  to  insist  on  the  deficit, 
and  usage  gives  him  the  advantage  over  the  opposite 
party,  who  claims  with  equal  obstinacy  that  the  money 
was  correctly  counted  by  him.  Such  reclamations 
have  occasionally  excited    suspicion,   and   a   small 


mPKOVED   DISCIPLINE.  179 

excess  has  been  made  up  in  the  Exchange,  as  a  bait 
to  detect  where  the  supposed  dishonesty  lay.  During 
the  several  years,  preceding  1855,  the  number  of 
city  banks  increased  from  twenty-live  to  more  than 
fifty.  Tellers  were  appointed  Cashiers,  and  Book- 
keepers succeded  Tellers.  Many  new  and  inexperi- 
enced clerks  were  employed,  and  reclamations  for 
differences  became  so  common,  and  were  occasionally 
so  large  as  to  be  quite  serious.  Bank  officers  con- 
sulted together,  and  imposed  stricter  rules  on  their 
Tellers.  It  was  even  suggested  to  make  them  per- 
sonally accountable  for  differences  which  they  could 
not  explain.  Frequent  disputes  arose  between  banks 
where  the  contesting  Tellers  were  equally  skillful, 
honest,  and  obstinate.  The  old  plan  of  exchanges  by 
Porters,  who  were  out  of  sight  and  knowledge  for  one 
or  two  hours  every  day  with  the  money  in  their  pos- 
session, left  the  door  open  for  suspicion  or  dishonesty 
among  them  also.  But  the  present  method  of  settle- 
ment by  the  Clearing  House,  together  with  improved 
bank  discipline,  and  the  refusal  of  some  banks  who 
were  confident  in  their  own  accuracy,  to  pay  claims 
unaccompanied  by  proof,  have  greatly  reduced  the 
number  of  such  claims ;  and  the  wonder  now  is,  that 
such  a  vast  amount  of  business  as  is  transacted  by  our 
city  banks,  should  be  carried  on  with  few  and  unim- 
portant errors. 

It  was  suggested,  when  the  Clearing  House  was  first 
organized,  that  the  packets  of  money  should  be  sealed 
up,  and  the  amount  indorsed  on  the  outside.  This 
method  has  been  partially  adopted.  It  relieves  the 
transit  of  suspicion,  and  reduces  the  question  to  one 


180  THE  DEPOSIT  TELLEE. 

of  honesty  and  accuracy  between  the  exchanging 
desks — a  very  desirable  issue.  There  might  yet  be 
duplicate  envelopes  and  seals,  but  with  such  hazards 
of  detection  as  few  persons  would  be  willing  to 
encounter. 

Differences  in  the  money  department  of  a  bank 
sometimes  spring  up  very  mysteriously.  A  Porter 
occasionally  goes  round  with  an  inquiry  of  each  : 

"How  did  your  cash  come  out  on  the  24th?" 
several  days  after  that  date. 

"  All  right.     Why  ?" 

"  Our  Receiving  Teller  is  a  thousand  short,  and 
can't  lind  it.     He  has  looked  everywhere,  too." 

The  next  day,  a  note  will  be  written  on  each 
exchange  list :    "  Please  send  lists  of  the  24:th." 

The  Teller  makes  a  general  and  thorough  revision 
of  all  his  figures,  checking  them  off  by  the  deposit 
tickets,  and  going  over  the  additions.  If  he  fails  to 
find  it  by  this  method,  he  sends  a  personal  inquiry  to 
each  dealer  in  whose  deposit  it  may  possibly  have 
occurred ;  and  still  failing,  he  communicates  his  mis- 
fortune to  the  Cashier,  by  whom  it  is  made  known  to 
the  directors  at  their  next  meeting.  The  search  is 
not  given  up  as  hopeless,  perhaps  for  several  weeks. 
The  unfortunate  Teller  is  annoyed  by  the  daily  ques- 
tion of  one  or  other  officer  of  the  bank,  or  by  a  direc- 
tor, or  fellow  clerk :  "  Have  you  found  your  differ- 
ence ?"  It  is  finally  considered  as  lost,  and  no  more 
referred  to. 

Bank  oflicers  are  slow  to  entertain  suspicion  of  a 
clerk,  unless  there  is  some  ground  for  it  in  his  charac- 


INTLUENCE  OF  THE  DEPOSIT  TELLER.      181 

ter  or  habits  of  living,  which  may  then  form  a  subject 
of  conversation  in  the  Board  of  Directors. 

There  is  a  looseness  of  practice  with  some  banks 
as  to  the  deficit  or  excess  of  cash  in  the  daily  accounts 
of  the  Tellers.  Small  sums  accrue,  which  are  thrown 
together  in  a  box  or  drawer,  and  applied  to  the  restor- 
ation of  small  deficits,  it  not  being  deemed  a  matter 
of  sufficient  consequence  to  be  noted  on  the  face  of 
the  day's  transactions.  The  chief  objection  to  this 
is,  that  it  is  a  departure  from  exactness  of  record — 
a  small  wedge  that  might  be  driven  further  in. 
Nothing  short  of  exactitude  should  be  allowed  in 
commercial  accounts,  and  especially  in  a  bank. 
There  should  be  a  ledger  account  opened  with  each 
Teller,  in  which  the  surplus,  if  any,  should  be  cred- 
ited under  its  actual  date,  or  deficiency  charged ;  and 
this  might  be  periodically  balanced  by  a  transfer  to 
Profit  and  Loss. 

The  Deposit  Teller  is,  to  a  great  extent,  the  abso- 
lute judge  in  his  department,  as  to  what  measure  of 
confidence  may  be  safely  reposed  in  individual  deal- 
ers. He  has  therefore  much  need  to  study  character. 
He  must  be  able  to  read  the  manner,  the  countenance, 
the  general  bearing  of  men.  If  he  is  fully  equal  to 
the  position,  he  is  the  first  person,  of  clerks  and  offi- 
cers, to  catch  indications  of  trick  or  weakness  in  the 
dealer,  which  are  most  likely  to  appear  in  his  deposit. 
The  Paying  Teller,  the  Book-keepers,  or  the  Officers 
of  the  bank,  see  only  the  aggregate  sum  set  down  to 
his  credit;  but  the  Deposit  Teller  handles  every 
check,  and  from  long  experience  discriminates  be- 
tween those  which  are  borrowed,  and  those  which 


182  THE  DEPOSIT  TELLEE. 

represent  the  real  transactions  of  trade.  He  fre- 
quently asks  questions,  to  satisfy  himself  of  the  credi- 
bility of  checks.  K  a  dealer  who  is  apparently  hard 
pressed  in  a  tight  market,  offers  unusual  checks,  he 
wants  to  know  who  the  drawers  are,  in  what  business, 
and  so  forth.  The  bank  officers  depend  on  him  to 
communicate  whatever  intelligence  he  receives  that 
may  affect  the  credit  of  customers ;  and  not  unfre- 
quently  consult  him  in  reference  to  discounts. 

"  How  do  the  deposits  of  Sweatem,  Sore  &  Co., 
look  now  ?" 

"  Eather  scaly,  sir.  Composed  of  an  inferior  class 
of  checks,  to  a  considerable  extent." 

"  Well,  you  are  careful  to  have  them  certified  ?" 

"  Oh,  yes.  I  have  been  obliged  to  hold  them  up 
pretty  closely  on  that  tack,  because  I  see  they  are 
generally  in  the  borrow." 

"  Deposits  not  so  good  as  formerly,  eh  ?" 

"  No.  Nothing  like  it.  Yery  much  larger  propor- 
tion of  accommodation  checks.  Mr.  Sweatem  comes 
himself,  occasionally,  and  looks  annoyed.  I  can't  help 
feeling  sorry  for  him  ;  at  the  same  time,  it  won't  do 
to  take  his  deposits  as  we  used  to." 

The  Cashier  returns  to  the  Directors'  room. 

"  Gentlemen,"  says  he,  "  I  don't  feel  satisfied  to 
discount  Mr.  Sweatem's  paper  without  another  name. 
From  what  the  Deposit  Teller  informs  me,  I  think 
that  he  is  becoming  embarrassed ;  and  his  line  is 
already  higher  than  it  ought  to  be." 

"  "We'll  let  it  slide,  then,"  says  the  President. 

The  Deposit  Teller  causes  dealers  to  be  expelled. 


CLOSING  Accomrrs.  183 

Nathaniel  Jones  has  several  times  deposited  kiting 
checks,  and  undertaken  some  sleight-of-hand  tricks 
inconsistent  with  fair  and  honorable  dealing.  The 
Teller  communicates  this  to  the  Cashier,  and  expresses 
his  opinion,  that  Nathaniel  is  an  unsafe  customer. 
"  When  he  comes  to  make  another  deposit,  send  him 
to  me.  Or,  sta.y !  Have  you  examined  the  Discount 
Ledger,  to  see  if  he  owes  us  anything  ?" 

"  Yes,  sir.  His  last  note  runs  off  in  a  few  days.  I 
concluded  to  get  along  without  betraying  any  distrust 
till  that  is  paid,  and  then  we'd  better  close  him  out." 

"  Yery  well.  Refer  him  to  me  at  the  proper  time, 
and  I'll  put  him  through." 

The  Teller  does  so. 

"  Mr.  Jones,"  says  the  Cashier,  "  it  appears  that 
you  have  deposited  kiting  checks  several  times  lately, 
and  practiced  some  irregularities  which  conflict  with 
our  rules !" 

Mr.  Jones  attempts  an  explanation,  which  proves 
altogether  unsatisfactory.  The  Cashier  expresses  his 
regret  at  feeling  compelled  to  advise  him  to  with- 
draw his  account  from  the  bank. 

"  I  can  do  that,  sir.  It  has  not  been  so  useful  to 
me  as  to  make  it  much  of  a  hardship  to  break  the 
connection." 

Mr.  Jones  takes  it  in  dudgeon,  nevertheless.  His 
sensibilities  are  not  so  blunt  but  that  he  can  feel  this 
sharp  sting  of  discredit.  The  Cashier  informs  him, 
that  it  is  both  the  interest  and  the  duty  of  the  officers 
to  cultivate  a  good  understanding  with  their  dealers ; 
but  it  is,  likewise,  their  interest  and  duty  to  get  rid 
of  dangerous  accounts.    He  poUtely  requests  him  to 


184  THE  DEPOSIT  TELLER. 

draw  a  check  for  his  balance  of  deposit,  and  to  leave 
his  book  for  settlement. 

An  account  cannot  always  be  closed  immediately 
when  it  ceases  to  be  honorable  and  safe.  There  are 
often  immatured  discounts,  which  might  be  endan- 
gered by  unfriendly  terms.  The  officers  and  clerks 
must  be  patient  till  these  are  paid. 

The  Deposit  Teller  is  much  less  liable  to  interrup- 
tion than  the  Paying  Teller.  When  the  ticket  is 
properly  made  out,  he  receives  the  deposit,  makes  the 
entries,  and  returns  the  book  to  the  dealer,  without 
speaking  a  word.  A  slight  nod  of  recognition  is  all 
that  passes  between  them,  and  so  he  may  go  on  by 
the  hour.  At  other  times,  the  dealer  will  stop  for 
conversation  about  the  business,  or  on  indifferent  sub- 
jects. One  whose  office-cash  is  wrong,  calls  to  ask 
if  any  error  appeared  in  the  Teller's  accounts  of  the 
day  before. 

"  Yes.  I  was  a  hundred  dollars  over,  and  found  it 
in  the  addition  of  your  ticket." 

He  unrols  the  packet  of  tickets,  shows  the  error  to 
the  dealer,  and  either  returns  the  amount  or  places  it 
to  his  credit. 

"  Don't  you  keep  a  copy  of  your  deposit  tickets  ?" 

"No." 

"  Well,  you  ought  to.     It  would  save  time." 

"  That's  true.  This  mistake  has  cost  me  two  hours, 
and  a  good  deal  of  anxiety." 

Nobody  knows  better  than  a  bank  teller  the  value 
of  strict  habits  in  these  apparently  small  points,  or  is 
better  qualified  to  give  instruction  about  them.  He 
has  a  decided  advantage  over  a  careless  and  disin- 


MISTAKES   OF  DEALERS.  185 

genuous  customer,  who  puts  his  inquiry  in  the  shape 
of  an  assertion : 

"  Tour  cash  must  have  come  out  a  hundred  dollars 
over  yesterday !" 

"Why  so?" 

"  Because  I  made  a  mistake  in  my  deposit." 

"  If  you  had,  I  think  I  would  have  found  it.  My 
accounts  balanced  within  two  cents." 

The  dealer's  ticket  is  produced,  and  the  Teller  shows 
the  marks  of  his  pencil,  by  which  he  distinguishes  the 
character  of  every  item  on  it — whether  it  was  a 
foreign  check,  a  city  bank  check,  bills,  silver,  or  gold, 
and  its  agreement  with  the  book-entiy. 

"  You  had  better  examine  your  own  figures  a  little 
better  before  you  make  such  a  claim  of  me !" 

If  this  dealer  should  come  later  in  the  day  and 
request  the  Teller  to  enter  his  deposit,  while,  to  save 
time,  he  transacted  business  at  another  desk,  he  would 
get  for  answer : 

"  'No,  sir.  You  must  wait  here  till  I  count  it.  I 
will  take  no  such  risk  from  a  man  who  may  come 
to-morrow  and  claim  to  have  given  me  a  hundred 
dollars  more  than  I  have  credited  to  him !" 

Honorable  dealers,  whom  the  Teller  knows  to  be 
exact,  will  occasionally  leave  a  large  amount  of 
checks  and  bank  bills  for  him  to  count  at  convenience, 
and  return  for  their  books  after  an  hour,  or  on  the 
following  day,  which  saves  them  the  time  that  would 
be  lost  by  falling  in  at  the  foot  of  a  long  row  of  depo- 
sitors and  waiting  their  turn.  But  the  rule,  to  count 
the  funds  in  the  presence  of  the  dealer,  is  generally 
adhered  to.    It  is  not  unusual  to  receive  packets  of 


186  THE  DEPOSIT  TELLER. 

money  at  the  dealer's  mark  without  opening  them, 
his  name  being  written  upon  the  strap  ;  in  which  case 
he  abides  by  the  Teller's  count,  and  makes  up  any 
deficit.  Small  coin  in  bags  or  packets,  marked  on 
the  outside,  are  received  without  opening,  subject  to 
the  examination  of  the  Specie  Clerk,  or  Porter,  at  his 
leisure.  Deposits  are  not  unfrequently  received  with 
a  ticket  only,  the  dealer's  book  having  been  mislaid, 
or  left  with  the  book-keeper  to  be  balanced.  The 
omission  is  supplied  by  a  subsequent  entry.  There 
are  many  careless  dealers  and  illegible  writers  among 
bank  customers,  who  find  it  difficult  to  count  money, 
or  to  make  the  simplest  addition  correctly.  It  is 
generally  easier  for  the  Teller  to  rectify  their  mistakes, 
than  to  require  them  to  do  it.  Instruction  gradually 
improves  them.  But  some  who  blunder  from  sheer 
carelessness  get  a  very  short  lesson. 

"  Here.  Take  your  money  and  book  back.  Go  to 
that  desk,  and  make  out  a  decent  list  of  the  checks  in 
proper  order,  and  the  bank  bills  separately,  and  then 
I'll  receive  it — not  before." 

The  Deposit  Teller  is  not  liable  to  be  cheated  by 
forged  checks.  He  transacts  business  with  those  per- 
sons only  who  have  been  admitted  as  dealers  by  the 
bank  oflicers,  and  who  are  therefore  presumed  to  be 
worthy  of  some  confidence.  As  they  have,  mostly, 
fixed  and  known  residences,  any  attempt  at  ordinary 
fraud  would  return  upon  them. 

Towards  the  latter  part  of  the  day,  depositors  begin 
to  crowd  in  upon  each  other's  heels.     "  First  come, 


DISTErBUTING   MONEY.  187 

first  served,"  is  the  rule  of  reception.  Each  takes  his 
place  in  the  row,  and  moves  up-  as  those  before  him 
complete  their  deposits. 

The  Assistant  Teller  is  generally  released  from  his 
duties  in  the  department  of  the  Paying  Teller,  about 
noon,  from  which  time  forth  he  is  an  auxiliary  to  the 
Deposit  Teller.  He  begins  immediately  to  assort  the 
money  and  checks  as  they  are  deposited.  There  are 
near  one  hundred  different  kinds  to  distribute  into 
upwards  of  fifty  boxes,  the  country  bills  falling  to 
those  banks  by  which  they  are  redeemed.  Long 
habit  gives  great  facility  and  rapidity  in  this  process. 
The  Assistant  is  awake  to  the  detection  of  counterfeit 
bills,  especially  in  the  unopened  packets,  the  examift- 
ation  of  which  is  transferred  to  him  by  the  Deposit 
Teller.  He  carries  forward  the  "  making  up"  as  fast 
as  possible,  keeping  the  counted  portion  under  the 
slip  in  each  box. 

All  the  checks  on  foreign  banks  are  handed  over 
to  another  clerk,  who  returns  for  them  a  charge-ticket 
against  the  bank  to  which  they  are  to  be  remitted  for 
collection ;  and  these  tickets,  together  with  the  office 
checks,  are  charged  to  their  respective  accounts,  mak- 
ing the  Second  Teller's  check-list,  of  which  the  item 
$64,387.92  in  the  Proof,  on  page  164,  is  an  example. 

Between  two  ani  three  o'clock,  there  is  mostly  a 
great  pressure  of  depositors,  with  apparent  hurry  and 
confusion.  Every  thought  of  the  Teller  is  fixed  in- 
tently, and  he  seldom  speaks  a  word,  except  to  give 
or  ask  a  necessary  explanation  of  things.  On  tight 
days  his  vigilance  is  exerted  with  an  intensity  that 


188  THE  DEPOSIT  TELLEK. 

soon  becomes  painful.  The  character  of  the  deposits 
shows  him,  from  day  to  day,  that  certain  dealers  are 
"  hard  up,"  and  he  looks  suspiciously  at  their  checks. 
Mr,  Jones  has  a  list  amounting  to  six  or  seven  thou- 
sand dollars,  in  which  there  is  a  check  of  twenty-five 
hundred.  The  Teller  deducts  it  from  the  footing, 
gives  him  credit  for  the  balance,  and  returns  it  with 
a  significant  glance,  which  that  gentleman  does  not 
wish  to  have  more  publicly  explained.  Mr.  Jones' 
certifications  are  proportionably  limited  at  the  coun- 
ter of  the  Paying  Teller. 

The  last  deposit  is  entered,  and  the  Teller  before 
closing  his  little  gate,  shakes  his  head  ominously,  and 
ribt  unsympathizingly,  at  a  man  who  had  been  stand- 
ing at  the  railing  for  the  last  hour,  holding  a  check 
in  his  hand.  To  the  inquiry  of  the  Cashier,  he  an- 
swers': 

"  He  is  a  poor  shoemaker,  with  Jacob  Screw's  check 
for  ninety  dollars,  and  he  is  watching  for  a  deposit 
that  he  may  di-aw  the  money  before  anybody  else 
gets  it." 

"  What !  Is  that  our  Screw  who  owns  so  much  real 
estate  ?" 

"  Tes,  sir," 

"  Well,  if  he  makes  a  deposit,  try  and  save  the  poor 
man,  and  then  close  his  account.  I'll  have  no  such 
scaly  fellow  in  the  bank." 

The  Exchange  slips  are  all  counted  up  like  the 
example  of  the  Mechanics'  Bank,  on  page  162,  and 
entered  on  the  Proof,  With  the  Office  list,  specie, 
and  checks  added,  it  must  agree  with  the  Cash-book. 
See  examples,  page  164. 


NOTES  CLASSinED.  189 


CHAPTER  yi. 

THE     NOTE     TELLEE. 

The  Kote  Teller  (or  Third  Teller)  receives  the 
money  for  all  promissory  notes  liquidated  at  the  bank, 
and  hence  his  title.  This  office  was  formerly  included 
with  the  duties  of  the  Deposit  Teller,  and  still  remains 
so  in  banks  of  small  business ;  but  such  has  been  the 
growth  of  commerce,  and  the  consequent  increase  of 
financial  methods,  that  the  division  has  been  found, 
in  the  larger  institutions,  both  convenient  and  neces- 
sary. 

There  are  two  classes  of  notes :  those  which  are 
discounted  by  the  bank,  and  those  which  are  merely 
deposited  by  the  owners,  for  payment  to  their  credit. 
They  are  called  hills  discounted,  and  collection  notes. 
The  book  in  which  the  former  are  entered  has  the 
title  of  General  Accounts,  and  that  appropriated  to 
the  latter  is  called  the  Third  Teller'' s  Cash-hooJc,  or 
Note-hooTc.  Both  classes  of  notes  are  filed  in  neat 
packets,  each  note  numbered  on  the  end  to  correspond 
with  the  number  in  the  TicTder.^ 

The  Teller  takes  up  the  Collection  ITote  Tickler, 


*  This  Is  an  arbitrary  term,  derived  probably  from  thff  practice  of  ticking  or 
checMng  off  figures  In  commercial  accounts.  A  particular  description,  and  a  page 
of  the  book,  is  given  under  the  head  of  the  Note  department. 


190  THE  NOTE  TELLEK. 

and  draws  out,  by  the  number,  the  notes  due  on  a 
particular  day.  To  be  sure  that  they  are  the  right 
ones,  he  checks  them  off  by  the  name  of  the  drawer, 
and  the  amount.  He  enters  them  on  his  cash-book 
in  the  alphabetical  order  of  the  indorsers'  names, 
writing  the  names  of  the  di-awers  next,  and  then  the 
amount,  as  in  the  example  page.  Those  which  belong 
to  foreign  banks  are  entered  in  the  book  of  General 
Accounts,  which  differs  from  the  individual  book  in 
having  no  extension  rulings,  as  all  the  postings  go 
into  one  ledger. 

"When  all  the  notes  are  entered,  they  are  arranged 
in  the  alphabetical  order  of  the  names  of  the  drawers, 
and  placed  in  a  pile  on  the  counter,  with  a  weight 
on  one  end,  so  that  any  particular  note  called  for  can 
be  slipped  out,  leaving  the  others  still  in  order. 

The  discounted  notes  are  drawn  from  the  files  in 
the  same  manner,  and  placed  alphabetically  under 
another  weight.  They  are  not  entered  separately  on 
the  cash-book,  as  they  are  to  be  posted  in  gross  to 
Bills  Discounted;  the  amount  is  transferred  from  the 
Tickler  page  at  the  close  of  the  day. 

The  Teller  is  now  prepared  to  receive  payment  for 
the  notes  as  they  may  be  called  for.  This  preparation 
is  always  kept  one  day  in  advance,  to  avoid  confusion 
with  other  duties  in  the  morning. 

The  bank  notices  of  the  discounted  notes  are  filled 
up  with  red  ink,  and  those  of  the  collection  notes 
with  black  ink,  which  indicates  at  once  in  which  pile 
the  note  is  to  be  found. 

The  Note  Teller  reaches  his  desk  by  half-past  eight 


PAGE  OF  THCRD  TELLER  S  NOTE-BOOK. 


191 


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192 


THE  NOTE  TELLEE. 


o'clock,  or  in  season  to  make  the  entries  of  remit- 
tances received  by  the  morning's  mail.  Tlie  follow- 
ing is  the  usual  form  of  a  letter,  with  abbreviations : 

•'PHILADELPHIA    BANK. 

"  Philadelphia,  June  18,  1858. 
"  H.  Morse,  Esq.,  Cash'r. 
•'  Dear  Sir — Inclosed,  find  for  our  credit : 


Peters, 

Cash'r., 

on 

Com. 

L. 

$9400.00 

Ruffin, 

Am. 

L. 

10000.00 

Luther, 

Am.  Ex. 

L. 

1575.60 

Simpson, 

Met. 

L. 

14263-'70 

Corse  &  Co. 

) 

Nat. 

L. 

1800.00 

Kerr, 

Phx. 

L. 

2740.00 

Brown, 

(1 

Thompson, 

8ds. 

P. 

1250.00 

Green, 

Burr  &  Co. 

10  ds. 

P. 

3263.20 

Wilson, 

3  mos. 

P. 

2249.75 

"White, 

90  ds. 

P. 

242.90 

Kent, 

Alby. 

2  mos. 

P. 

506.00 

Mather, 

Buffo. 

45  ds. 

P. 

1000.00 

Gray  &  Co., 

Hartfd. 

Sight, 

P. 

2600.00 

Roberts, 

Port. 

10  ds. 

P. 

1050.00 

"  Market  tight — no  change  in  rates — business  active,  &c. 

"  Yours,  resp'y,  T.  Barker,  Cash'r." 

The  open  letter  is  given  to  the  Teller,  who  writes 
his  initial,  L.,  as  his  receipt  for  all  checks  that  he 
takes  from  it  for  credit  to  the  remitting  bank.  In 
like  manner,  all  letters  containing  cash  documents 
are  passed  into  his  hands,  and  the  proper  entries 
made  from  them. 


Both  the  discounted  and  collection  notes  are  classed 
into  domestic  and  foreign.  The  latter  are  payable  in 
various  towns  and  cities  over  the  country,  and  those 


PAYING   NOTES.  193 

which  belong  to  the  accounts  of  the  Note  Teller,  are 
transferred  to  him,  when  paid,  from  another  book. 

The  payment  of  notes  begins  as  soon  as  the  bank- 
doors  are  open  for  public  business.  Generally  the 
Runner's  notice  is  handed  in,  with  a  certified  check, 
or  the  exact  amount  in  bank  bills.  It  is  one  of  the 
best  habits  of  a  Teller's  desk  to  preserve  the  notices 
and  memoranda  of  transactions  in  the  order  of  their 
occurrence,  until  the  cash  is  proved  at  the  end  of  the 
day.  They  serve  as  hints  to  the  memory,  and  although 
apparently  trifling,  often  supply  a  link  in  a  chain  of 
investigation.  Even  if  the  Teller's  cash  should  prove 
on  first  trial,  it  is  still  better  to  preserve  his  old  file  for 
several  days,  until  the  last  probability  of  error  shall 
have  passed.  Each  bank  has  its  stamp  to  imprint  on 
notes  when  paid,  of  which  the  following  is  a  common 
pattern. 


The  ink  being  in  oil  colors,  cannot  be  readily  re- 
moved from  the  face  of  the  note,  without  at  the  same 
time  obliterating  the  writing ;  and  it  makes  a  perma- 
nent record  to  the  payer,  by  which  the  transaction 
may  be  traced,  if  necessary,  at  any  subsequent  time. 
It  is  also  a  substitute  for  the  Cashier's  indorsement, 
to  which  the  payment  is  generally  subject. 

Up  to  one  o'clock  or  later,  payments  are  made 
9 


194  THE   NOTE   TELLER. 

deliberately,  and  the  Teller  mostly  has  time  to  enter, 
and  prepare  his  notes  for  the  following  day.  He  is 
obliged,  however,  to  answer  many  questions,  and  to 
make  examinations,  which  are  not  always  connected 
with  his  business. 

A  dissatisfied  face  fills  the  gate  in  the  railing : 

"  Is  there  a  note  of  J.  Freeman,  six  hundred  dollars, 
due  here  to-day  ?" 

"  No,  sir." 

'  "Won't  you  look  again  ?  I've  been  to  half  the 
banks  in  the  city,  and  can't  find  it." 

"  Have  you  no  notice  ?" 

"  jS^o,  sir.  I  never  get  any,  and  always  have  to 
run  about  two  or  three  hours  to  hunt  up  my  notes." 

On  looking  over  the  Tickler,  the  Teller  discovers 
a  record  of  J.  Trueman,  $600,  due  three  days  later, 
and  on  producing  the  note,  Mr.  Freeman  identifies  it 
as  his  own.  The  signature  is  carelessly  written,  and 
hence  the  error  in  copying  it.  Besides,  there  are  ten 
or  a  dozen  difierent  J.  Freemans  and  J.  Truemans  in 
the  directory,  so  that  the  chances  of  the  Runner  find- 
ing the  right  man  w^ere  as  twenty  to  one.  Mr.  Free- 
man had  himself  omitted  to  allow  for  the  three  days' 
grace,  in  calculating  the  maturity  of  the  note,  so  that 
he  is  entirely  the  author  of  his  own  perplexity.  The 
Teller  advises  him  to  write  his  name  more  distinctly, 
and  to  mark  his  residence  under  it,  by  which  he  will 
avoid  all  trouble  in  future.  If  he  had  applied  at  a 
later  hour,  when  the  Teller  could  not  spare  the  time 
to  help  him  out  of  his  trouble,  the  note  would  have 
been  protested. 

It  is  common  for  tradesmen  to  count  sixty  days  as 


TILE   WRONG   OKDEK.  195 

two  months,  by  wliicli  they  get  a  wrong  date  of 
maturity  for  their  notes,  and  often  spend  hours  in 
searching  for  them,  without  success.  Many  persons 
keep  no  record  of  their  notes,  depending  on  the  bank 
to  serve  them  with  notices.  Some  ask  for  a  note  or 
draft  by  the  name  of  the  indorser  or  drawer,  instead 
of  the  payer,  which  is  always  the  distinguishing  name 
in  bank  records. 

The  delivery  of  a  bank  notice  to  a  wrong  person  of 
the  same  name,  incommodes  both.  One  is  obliged  to 
hunt  his  note  from  bank  to  bank  till  he  finds  it,  and 
the  other  is  disturbed  by  a  call  to  pay  a  note  that  he 
doesn't  owe.  As  there  is  a  chance  of  his  having  given 
one  without  a  record,  he  hurries  off  to  the  bank  to 
examine  the  original.  On  its  being  shown  he  says, 
angrily : 

"  Not  mine ! — I  wish  you  wouldn't  be  bothering  me 
with  other  people's  notes.  What  have  I  got  to  do 
with  that  ?" 

"  An  unavoidable  mistake,  sir,  by  our  Eunner.  He 
can't  always  hit  the  right  man,  when  there  are  a  dozen 
of  the  same  name  in  the  directory." 

The  customer  thinks  more  angrily  still  that  he 
'■'■ought  to  hit  the  right  man.  It  has  cost  him  an 
hour's  time  and  interruption  to  look  up  the  matter, 
and  it  isn't  the  first,  nor  the  twentieth  wrong  notice 
that  has  been  served  on  him  by  different  banks  within 
a  year." 

He  might  save  himself  from  all  annoyance  of  this 
kind  by  the  simple  rule,  which  no  merchant  or  trades- 
man ought  to  neglect — to  record  bills  payable  before 
signing  them.  Ko  prejudice  can  then  arise  from  dis- 
regarding the  mistakes  of  others. 


196  THE   NOTE   TELLER. 

Mr.  Fosforus  hands  a  certified  check  to  the  Teller, 
and  wants  to  know  "  why  he  can't  have  notices  gent. 
The  Runner  of  any  bank  ought  to  be  kicked  out  of 
it  head  foremost  for  such  willful  neglect." 

The  Teller  calls  the  Runner  to  explain.  Mr.  Fos- 
forus flashes  out  again  in  a  general  abuse  of  bank 
clerks,  and  "  supposes  none  of  'em  ever  heard  of  tlie 
old  silk  house  of  Fosforus,  Pine  &  Co." 

The  Runner  declares  that  he  delivered  the  notice 
to  Mr.  Pine  in  person,  as  he  stood  in  his  store  door. 
"  Has  a  distinct  recollection.  Knows  Mr.  Pine  per- 
fectly well.  Been  in  his  store  a  thousand  times. 
Bushy  hair — wears  gold  specs.  Must  have  put  the 
notice  in  his  pocket  instead  of  giving  it  to  his  clerk." 

These  altercations  assume  every  phase  that  can  be 
given  by  irritable  temperaments,  and  are  liberally 
interspersed  with  other  accidents  of  the  desk. 

A  dealer  who  has  collection-paper  coming  due,  and 
depends  on  its  payment  for  his  own  liquidations, 
applies  to  know  what  portion  of  it  is  paid. 

Another  inquires  whether  certain  protested  paper 
with  his  indorsement  has  been  taken  up.  Some  want 
to  withdraw  paper  that  will  not  be  paid. 

The  counting  of  bank  bills  received  in  remittance 
from  correspondents  in  the  country,  is  one  of  the 
common  occupations  of  the  Note  Teller.  These  are 
to  be  distributed  in  his  drawer,  and  recounted  in  the 
exchange  lists  to  which  tliey  respectively  belong. 

An  Express-agent  brings  a  bag  of  gold,  or  a  box  of 
silver,  to  go  to  the  credit  of  a  country  bank. 

The  President  or  Cashier  comes  along  and  looks 
casually  at  the  various  books  and  documents  on  the 


VAKIETIE6.  197 

Teller's  desk,  and  inquires  whether  his  payments  are 
going  as  favorably  as  usual. 

Many  merchants  write  their  notes  payable  at  the 
bank  where  they  keep  their  account.  The  Teller 
reserves  the  presentation  of  these  until  the  latter  part 
of  the  day,  when  the  deposits  are  made  to  meet  them, 
and  then  sends  them  by  the  Porter  or  other  messen- 
ger, to  the  different  banks  for  certification.  When 
returned,  he  stamps  the  accepted  ones  paid,  and  dis- 
tributes them  in  his  exchange  drawer. 

The  last  half-hour  of  a  busy  day  is  full  of  excite- 
ment at  the  Teller's  desk.  A  line  of  twenty  or  more 
note-payers  is  formed  along  the  outside  of  the  counter, 
pressing  on  each  other's  heels,  and  impatient  that 
those  before  should  crowd  up.  A  new  face  is  thrust 
into  the  little  railing-gate  every  second.  Some  of 
them  are  in  desperate  haste,  and  the  moment  they 
receive  their  notes,  rush  off  to  other  banks  to  make 
other  payments.  The  Teller  has  not  time  now  to 
answer  questions,  or  to  give  explanations  of  anything. 
His  attention  must  not  be  distracted  for  an  instant 
from  the  process  of  receiving,  counting,  and  stamping. 

After  the  last  payer  is  dismissed,  he  closes  his  gate, 
erases  from  the  Cash-book  and  Discount  Tickler  the 
notes  that  remain  unpaid,  and  delivers  them  to  a 
Notary  Public  for  protest. 

The  protest  consists  in  presenting  the  note  at  the 
place  of  business  of  the  drawer,  or  wherever  it  is 
made  payable,  and  demanding  the  money  for  it.  If 
still  refused,  it  is  attached  to  a  printed  legal  form 
which  recites  the, facts,  and  returned  to  the  bank  on 
the  following  day.     The  Notary  sends  notice  of  the 


198  THE  NOTE  ITiLLEK. 

protest  to  all  tlie  indorsers,  and  to  the  drawer  of 
drafts,  whicli  advises  them  of  their  liability  for  the 
payment,  in  case  of  continued  default  of  the  first 
debtor.  If  the  notes  should  be  paid  when  presented 
by  the  Notary,  he  returns  the  money  to  the  bank  on 
the  next  morning. 

The  remaining  labor  of  the  JN^ote  Teller  is  to  com- 
plete his  Proof,  wliich  is  a  list  precisely  similar  to 
■  that  of  the  Deposit  Teller.  His  money-drawer  is  of 
the  same  construction,  and  his  manner  of  distributing 
the  bills  and  checks  the  same.  On  the  following 
morning  ho  transfers  the  entire  receipts  of  his  depart- 
ment to  the  Deposit  Teller,  who  incorporates  them 
with  his  own,  in  a  list  called  "  The  Settling  Clerk's 
Statement,"  of  which  an  example  will  be  given  in  the 
account  of  the  Clearing  House.  The  receijjts  of  both 
desks  are  then  transferred  to  the  Paying  Teller,  and 
all  the  exchangeable  portion  thereof  sent  by  him  to 
the  Clearing  House. 

This  is  the  complete  theory  of  the  Cash  Department 
of  the  bank.  All  the  receipts  pass  every  day  into 
the  hands  of  the  Paying  Teller,  leaving  no  open 
account  with  either  of  the  receiving  tellers. 


INTEREST   AND   DISCOUNT.  199 


CHAPTEE    VII. 

THE      DISCOUNT      CLEKK 

The  profit  of  tlie  banking  business  consists,  in  gen- 
eral terms,  of  interest  on  money.  Strictly,  it  is  com- 
posed of  interest,  discount,  and  exchange. 

Interest  is  simply  the  rent  of  money.  It  is  payable 
at  intervals,  as  agreed  on  between  borrower  and 
lender,  and  is  not  ordinarily  considered  due  until  the 
principal  has  been  enjoyed. 

The  difference  between  interest  and  discount  in 
bank  practice  is,  that  the  former  is  payable  at  the 
end  of  a  given  term,  while  the  latter  is  reserved  from 
the  principal  at  the  beginning  of  the  term. 

When  a  note  is  discounted  at  bank,  the  interest 
for  the  period  which  it  has  to  run  before  maturity  is 
subtracted  immediately,  and  the  merchant  receives 
credit  for  that  much  less  than  the  total.  This  admits, 
to  some  extent,  of  compounding  interest. 

One  hundred  thousand  dollars  loaned  on  mortgage 
for  six  months,  would  yield  at  the  end  of  that  time, 
at  the  rate  of  seven  per  cent,  a  profit  of  three  thou- 
sand five  hundred  dollars  to  the  lender.  The  same 
amount  discounted  according  to  bank  usage,  would 
give  the  lender  the  same  profit  at  the  'beginning  of  the 
term,  with  which  he  could  discount  another  note  of 
thirty-five  hundred  dollars  for  the  same  period.     This 


200  THE   DISCOUNT   CLERK. 

would  yield  an  additional  profit  of  one  hundred  and 
twenty-two  dollars  and  fifty  cents ;  and  this  sum  again 
loaned  for  the  same  time,  would  give  a  profit  of  about 
forty-three  cents  more.  The  difierence  between  the 
two  methods  of  operation  on  this  amount  is  one  hun- 
dred and  twenty-two  dollars  and  ninety-three  cents, 
for  six  months. 

The  loan  on  simple  interest  would  give  this  advan- 
tage to  the  borrower.  By  the  method  of  discount,  it 
is  reserved  to  the  lender. 

A  bank  of  several  millions  of  capital  derives  a  pro- 
portionably  large  gain  by  the  same  process ;  and  the 
reduction  of  the  discount  period  from  six  to  two 
months,  gives  the  opportunity  of  compounding  the 
interest  more  frequently.  The  average  period  in  our 
city  banks  is  about  forty  days,  which  makes  nine 
compounding  terms  for  the  year. 

The  general  practice  of  Bank  Board  Directors  in 
New  York  is,  to  meet  on  two  stated  days  of  the  week, 
to  act  on  the  notes  offered  for  discount.  These  are 
called  Discount  Days.  Those  immediately  preced- 
ing are  called  Offering  Days,  because  the  notes  are 
then  sent  in  for  preliminary  record  and  examination. 

The  term  Off'ering  is  applied  either  to  a  single  note, 
or  to  the  aggregate  amount  ofi'ered  at  a  time.  When 
bank  ofiicers  meet,  and  wish  to  ascertain  the  general 
current  of  the  market,  they  ask :  "  How  are  your 
ofi'eriugs  ?"  The  same  expression  is  used  in  the  news- 
paper reports  to  indicate  the  activity  of  demand  for 
money :  "  The  ofierings  at  bank  are  heavy — or  light." 

In  a  bank  of  the  first  class,  the  number  of  dealers 


PKEPAKATION   OF   NOTES.  201 

who  apply  for  discounts  on  the  stated  days  is  from 
seventy-five  to  one  hundred.  Some  offer  a  single 
note,  and  others  a  dozen.  Tliey  are  usually  enclosed 
in  a  letter  sheet,  with  a  brief  description,  embracing 
drawer,  date,  and  amount,  with  or  without  special 
communication. 

FOKMS   OF   LETTEKS   ENCLOSING   OFFERINGS   FOR   DISCOUNT. 

New  York,  June  18,  1857. 
Thos.  Brown,  Esq.,  Cash'r: 

Dear  Sir — We  offer  for  discount  notes  enclosed,  as 
follows : 

John  Snowden,     Jan.  10,       6  mos.     $1245.60 
Wm.  Wilson,        Feb.  25,         do.  1400.00 

S.  Cannon,  April  4,       4  mos.       2340.75 


$4986.35 
Yours,  respectf  Y)  John  Jones  &  Co. 

We  beg  to  say  that  our  account  will  show  a  fair 
running  balance,  and  that  our  discount  line  has  been 
materially  reduced  within  the  last  month. 

J.  J.  &  Co. 

N'ew  York,  June  18,  1857. 
Thos.  Brown,  Esq.,  Cash'r: 

Dear  Sir — Enclosed,  find  our  note  at  sixty  days, 
for  $10,000,  with  fifteen  of  our  business  notes  as  col- 
lateral.    By  discounting  the  same,  you  will  oblige, 
Yrs.,  Resp'y.  Cobb  &  Bro. 

ITew  York,  June  18,  1857. 
To  Pres.,  Cash.,  and  Directors,  Comisiercial  Bank  : 

Gentn — Pleas  discount  My  note  herein,  Jno.  Jones, 
$275,  it  is  a  one  and  'No  mistake. 

Obt.  P.  Stanley. 

9* 


202  THE   DISCOUNT   CLEKK. 

New  York,  June  18,  1857. 
Thos.  Bko"\\t^,  Esq.,  Cash'r : 

Dear  Sir — we  enclose  again  our  offering  for  dis- 
count, which  you  rejected  last  day.  See  memo.,  with 
particulars. 

Our  need  is  somewhat  pressing,  and  you  would  do 
us  a  great  favor  to  pass  the  whole.  The  paper  is 
good  beyond  casualty.  If  you  desire  reference,  or 
turther  explanation  with  regard  to  it,  we  can  satisfy 
you.  The  general  run  of  our  dealings  with  the  bank 
entitles  us  to  more  liberal  consideration  than  we  have 
yet  had.  Our  balance  of  account  has  seldom  fallen 
below  $3,000,  and  our  line  has  not  averaged  over 
$8,000.  It  is  now  reduced  to  about  half  that  sum. 
We  therefore  make  this  application  with  confidence 
that  it  will  be  accepted. 

Yours,  respectf 'y.  Sergeant,  Wilkes  &  Co. 

"N"ew  York,  June  18,  1857. 
Cashier  Commercial  Bank  : 

Put  to  my  credit  $1800  as  inclosed. 

Yrs.,  &c.  M.  Wessells. 

The  Discount  Clerk  records  them  in  the  Offering 
Book,  in  the  alphabetical  order  of  the  dealers'  names, 
and  numbered  to  correspond  with  the  margin.  In 
the  first  column  (see  page  203),  are  the  names  of  the 
offerers,  followed  by  their  average  balance  of  deposits, 
the  amount  which  they  have  already  under  discount, 
the  names  of  indorsers,  if  any,  or  statement  of  colla- 
teral securities,  the  names  of  the  payers,  the  time  to 
maturity,  and  lastly  the  amount.  ITiis  record  pre- 
sents an  abstract  of  the  whole  Offering,  with  the  state 
of  each  account,  enabling  the  directors  to  judge  of  its 
value  and  desert.  The  footing  of  the  column  shows 
the  total  amount  offered. 


PAGE    OF    OFFERING-BOOK. 


203 


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204  THE   DISCOUNT   CLERK. 

The  form  of  the  Offering  Book  is  not  the  same  in 
all  banks.  Some  dispense  with  the  balance  column, 
and  some  add  another,  showing  the  liquidations  before 
the  next  discount  day.  Others  enter  loans  also  on 
this  book,  to  the  credit  of  the  borrower,  on  the  theory 
that  everything  in  the  nature  of  a  discount  ought  to 
be  shown  in  one  consecutive  history.  The  Directors 
have,  then,  before  them  when  they  meet,  a  statement 
of  every  transaction  that  has  taken  place,  without  the 
necessity  of  referring  to  other  books. 

The  old-fashioned  Offering  Book  was  a  mere  blotter 
of  abbreviated  entries,  from  which  the  accepted  paper 
was  transcribed  either  to  a  General  Register,  and  from 
that  to  the  Discount  Books,  or  direct  to  the  latter. 
This  method  is  still  in  use,  and  in  banks  which  have 
much  paper  of  an  inferior  class  offered,  the  transcrip- 
tion is  necessary  to  a  neat  record. 

After  preparing  the  Offering  Book,  the  clerk  refolds 
the  envelopes,  so  that  the  notes  can  be  conveniently 
examined,  without  being  separated  therefrom. 

The  preparation  of  these  details  occupies  consider- 
able time ;  and  therefore  it  is  required  that  the  offer- 
ings be  brought  in  before  two  o'clock.  They  are 
dropped  in  a  box  at  the  desk  of  the  Discount  Clerk. 

Dealers  seldom  appreciate  the  value  of  time  to 
bank  clerks.  They  are  apt  to  say :  "  That's  what  he 
was  put  there  for — to  wait  on  customers.  He  gets  a 
good  salary — who  cares  if  it  is  after  two  ?" 

An  addition  to  the  offerings  after  they  are  partly 
recorded  deranges  their  alphabetical  order — which 
embarrasses  every  subsequent  use  of  the  book  in 
transcribing  or  posting.     The  Ledger  accounts  are 


DISCOUNT  BOOKS.  205 

opened  in  the  same  order,  and  not  only  the  facility, 
but  the  accuracy  of  the  system  is  greatly  aided  by  its 
preservation.  Each  dealer  should  reflect  how  much 
easier  it  is  for  him  to  observe  a  stated  rule,  than  it 
is  for  the  clerk  to  overcome  the  inconvenience  that 
results  from  the  concentration  of  many  irregularities 
on  one  point. 

The  Offering  Book  and  the  packet  of  notes  are 
returned  to  the  Discount  Clerk,  after  being  acted 
upon  by  the  Board  of  Directors.  He  finds  the  letter 
A  (accepted),  scored  opposite  to  each  offering  that  is 
to  be  discounted,  and  the  letter  R  (rejected),  opposite 
those  which  are  refused.  Any  that  are  otherwise 
disposed  of,  are  marked  accordingly. 

The  record  of  the  accepted  paper  is  now  transferred 
to  Discount  J3ooks,  of  which  there  is  one  for  each 
dealer's  ledger,  embracing  the  same  letters  of  the 
alphabet.  The  discount  and  net  proceeds  of  the  notes 
are  extended  in  the  additional  columns  on  the  Offering 
Book,  of  which  the  footings  must  agree  with  the 
aggregate  footings  of  the  Discount  Books.  From 
these  latter  the  credits  are  posted  to  the  accounts  in 
the  ledgers. 

Another  plan  is,  to  transfer  the  discounted  paper 
from  the  Offering  Book  to  a  Register,  whence  it  is 
posted  to  the  personal  accounts. 

There  are  also  Discount  Ledgers,  which  are  opened 
in  the  same  manner  as  the  personal  ledgers,  but  em- 
brace the  accounts  of  those  dealers  only  who  get  notes 
discounted.  They  show  each  note  that  has  been  dis- 
counted for  any  dealer,  the  date  of  its  discount,  the 
indorser  or  security  liable  for  it,  if  any,  and  the  time 


206  THE    DISCOUNT   CLERK. 

of  its  maturity.  The  whole  is  kept  footed  in  pencil, 
being  subject  to  frequent  change  by  the  payment  of 
notes  as  they  mature,  and  the  addition  of  new  entries. 
They  exhibit  also  the  liability  of  each  dealer  as  indor- 
ser  for  others  on  discounted  paper ;  this  being  one  of 
the  most  important  points  to  guard  in  the  banking 
business.  K  any  two  dealers  should  exchange  notes 
or  indorsements,  and  put  them  in  the  same  bank, 
these  books  would  expose  the  fact.  They  are  placed 
on  the  Directors'  table  on  discount  days  for  reference, 
as  may  be  required. 

It  is  from  these  auxiliary  Ledgers  that  the  clerk 
ascertains  the  amount  of  discounts  set  down  in  the 
Offering  Book.  He  keeps  daily  supervision  over 
them,  cancelling  the  paid  notes  as  fast  as  they  mature, 
by  a  ruled  line  across  the  figures,  without  obliterating 
the  record. 

The  notes  are  numbered  on  the  back  and  end 
with  red  ink,  and  filed  in  neat  packets.  They  are 
also  transcribed  on  the  Discount  Ticklers,  each  under 
the  date  of  its  maturity,  with  the  number,  name  of 
the  payer,  and  amount.  The  Ticklers  continue  to 
receive  accessions  by  new  discounts,  up  to  within  a 
few  days  of  the  transpiring  date.  They  are  kept 
added  in  pencil  until  that  time,  when  they  are  finally 
closed  in  ink. 

In  some  banks,  the  notes  are  filed  without  number- 
ing, those  of  each  day  being  kept  in  a  separate  packet, 
and  the  packets  in  the  consecutive  order  of  the  dates. 
This  plan  is  thought  to  be  more  convenient  where  the 
number  of  notes  is  very  large,  and  it  has  the  advan- 
tage of  easier  reference  to  all  that  mature  on  any  sin- 


CUSTODY    OF   NOTES.  207 

gle  day.  It  also  brings  the  department  more  within 
the  reach  of  an  extempore  examination  without  the 
aid  of  the  clerk  himself. 

The  Discount  Clerk  makes  a  proof  of  his  books  at 
the  end  of  each  month.  The  addition  of  his  Ticklers 
ought  to  show  the  exact  amount  of  bills  discounted, 
corresponding  with  the  balance  of  this  account  on 
the  General  Ledger.  The  final  and  conclusive  test 
is,  by  checking  off  the  Ticklers  with  the  notes,  which 
proves  them  to  be  in  actual  possession  of  the  bank. 

The  Discount  Clerk  holds  in  his  immediate  charge 
the  greater  part  of  the  bills  receivable,  in  which  the 
means  of  the  bank  are  invested.  He  deposits  the 
trunk  containing  them  in  the  vault  at  the  close  of 
the  day,  and  resumes  the  personal  care  of  it  on  the 
next  morning.  The  ofiicers  may  change  or  regulate 
this  custody,  but  they  do  not  interfere  with  it  so 
as  to  impair  his  direct  responsibility  for  its  con- 
tents. If  they  wish  to  examine  particular  notes, 
they  do  so  in  his  presence,  or  require  him  to  pro- 
duce them.  Tlieir  own  meddling,  or  that  of  other 
clerks,  would  justify  the  defence  that  he  is  no  more 
accountable  than  they,  if  any  should  be  lost  or 
stolen;  and  it  might  exonerate  his  bondsmen  from 
their  liability. 

Next  to  the  officers,  the  Discount  Clerk  shares 
most  in  personal  intercourse  with  the  customers 
of  the  bank;  and  in  some  respects,  on  terms  more 
favorable  to  the  observation  of  character,  on  which 
so  much  depends  in  the  business.  They  apply  to  him 
after  the  adjournment  of  the  Board  meetings  to  know 
how  their  Offerings  have  been  disposed  of,  and  he 


208  THE   DISCOUNT   CLEEK. 

witnesses  their  extemporaneous  expressions  of  anxiety 
and  disappointment  when  they  are  rejected.  He  is 
the  stated  medium  of  communication  between  the 
officers  and  the  dealers  respecting  the  business  of  his 
desk,  and  in  the  majority  of  cases  there  is  no  need  of 
any  other.  In  a  season  of  severe  pressure,  when  per- 
sonal solicitation  with  the  officers  becomes  common, 
a  half  confidential  tone  is  maintained  with  the  clerk. 
He  is  "  near  the  throne,"  and  if  not  specially  in- 
structed, is  supposed  to  have  more  or  less  influence, 
and  to  be  capable  of  giving  some  useful  hints. 

The  stated  meetings  of  the  Board  usually  begin  at 
nine  o'clock,  A.  M.,  and  occupy  from  one  to  two 
hours.  The  customers,  or  their  clerks,  then  call  to 
know  tlie  result  of  their  applications.  "When  the 
market  is  very  stringent,  they  not  unfrequently  throng 
at  the  desk  before  the  adjournment,  taking  their 
places  in  succession  to  push  forward  as  soon  as  the 
books  and  notes  are  given  to  the  clerk.  The  letter  A 
enables  him  to  answer,  either  by  an  affirmative  nod, 
or  the  monosyllable  "  done,"  and  the  letter  R,  by 
reference  to  the  number,  to  return  the  rejected  notes 
in  the  original  envelop  to  the  owner. 

The  first  crowd  of  the  morning  is  composed  of  the 
most  anxious  dealers.  It  is  important  for  them  to 
know  early,  whether  they  must  seek  elsewhere  the 
bread  of  commercial  life  for  the  day.  They  are  fol- 
lowed by  the  less  needy,  or  the  more  deliberate,  who 
know  the  value  of  "  deportment "  in  a  tight  market. 

"  Notes  done,  sir  ?"  is  asked  by  the  applicants, 
either  verbally,  or  in  pantomime. 

The  affirmative  causes  a  bright  gleam  of  sunshine 


*-  _  / 


Consolation.    Better  fare  than  at  the  Discount  Board. 


DISAPPOINTED    DEALERS.  209 

in  the  face  ot  the  questioner.  But  a  negative  to  the 
next  comer  substitutes  a  scowl  of  disappointment. 

"  What  is  the  reason  of  that,  sir  ?  Has  the  bank 
stopped  discounting  ?" 

"  Market  tightened  up,  sir.  Deposits  down.  Offer- 
ings very  heavy." 

The  customer  departs  with  an  audible  growl  of 
indignation  at  what  he  conceives  to  be  "  a  denial  of 
rights." 

Nurriber  Twenty.  "  Good  morning,  Mr.  Smith, 
what  have  you  to  say  to  me  ?" 

"  Nothing  very  encouraging,  sir.  The  Board  dis- 
counted one  of  your  notes." 

"  What — only  one  out  of  ten  ?" 

"  That's  all.  Yery  good  proportion,  I  do  assure 
you." 

"  A  single  thousand !  And  I  want  five  to-day ! 
Where's  the  President?" 

"  In  his  room,  sir.  But  I  don't  believe  you'll  gain 
anything  by  talking  to  him.  Our  receipts  are  very 
small  just  now,  and  the  Porter  brings  bad  news  from 
the  Clearing  House." 

Numher  Twenty-one  fills  the  little  gate  in  the  rail- 
ing with  a  grum  and  thi-eatening  visage,  but  does  not 
speak.  The  clerk  knows  him  as  a  frequent  applicant, 
and  seldom  a  fortunate  one,  the  character  of  his 
account,  as  well  as  of  his  paper,  being  inferior,  and 
presenting  no  claims  worthy  of  consideration  by  the 
Directors.  He  receives  back  his  offering  without 
remark,  and  departs  in  sullen  silence. 


210  THE    DISCOUNT   CLEKK. 

Number  Twenty-two.  "  Well,  Smith,  don't  tell  me 
my  notes  ain't  done  ?" 

"  "Wouldn't  if  I  could  help  it,  sir.  Board  did 
mighty  little  this  morning." 

"  Hang  the  Board  !  Isn't  there  any  explanation  ? 
Dont  they  know  the  paper  ?     Is  it  too  long  ?" 

"  ISTo  explanation  given  to  me.  Bank's  short. 
Can't  help  it.     Majority  in  the  same  boat." 

Twenty-two  leaves  an  oath  behind  him. 

Number  Twenty-three.     "  My  paper  done  ?" 

"  No,  sir."     . 

"  What's  in  the  wind  now  ?" 

"  Market  tightened  up." 

"  Don't  they  do  any  thing  ?" 

"  Not  much." 

"  Well,  they  do  so7ne  !  Why  the  devil  can't  they 
distribute  the  thing  impartially  ?" 

"  I  s'pose  they  try  to  do  it ;  but  it's  not  an  easy 
matter  to  satisfy  an  offering  of  four  hundred  thousand 
dollars  with  about  one  fourth  of  that  amount  of 
means." 

Numher  Toenty-four  is  a  man  in  his  shirt-sleeves — 
a  carman  or  laborer,  with  a  small  debt  on  his  house 
to  discharge. 

"  Mr.  Clerk,  will  you  be  good  enough  to  hand  me 
the  proceeds  of  that  note  ?" 

"  What  name,  sir  ?" 

"  Axletree  is  my  name." 

"  Mr.  Axletree,  I  am  sorry  to  return  your  note. 
The  Board  couldn't  discount  it." 


>=*^-. 


lit. 


iiiiniiiiiiiiiminwinwimummuuniinMi  ii 

Outside.    Two  jjer  Cent,  a  Month. 


ME.    AXLETKEE.  211 

"  What !  Can't  give  me  the  money  for  a  note  of 
live  hundred  dollars  ?" 

The  explanations  of  the  clerk  are  nothing  to  him. 
He  sees  only  a  bank  with  three  millions  of  capital  on 
one  hand,  and  his  trifling  call  for  five  hundred  dollars 
on  the  other. 

"  IS'ow,  what  shall  I  do  ?"  he  asks.  "  I  have  no 
other  place  to  get  this  money.  I've  kept  an  account 
in  this  bank  for  five  years  and  never  asked  a  favor ; 
and  now  I  want  tliis  little  accommodation,  and  can't 
get  it !     Do  you  call  that  fair  ?" 

The  Discount  Clerk  steps  over  to  the  Book-keeper's 
desk  and  examines  Mr.  Axletree's  account.  He  finds 
that  his  average  balance  for  several  years  has  seldom 
fallen  below  three  or  four  hundred  dollars.  On  com- 
municating this  fact  to  the  Cashier,  Mr.  Axletree  is 
recalled,  and  the  merits  of  his  application  appearing 
sound,  the  note  is  passed  to  his  credit. 

Attention  to  these  small  and  comparatively  obscure 
accounts  is  one  of  the  best  traits  in  a  bank  officer  or 
clerk.  They  are  liable  to  be  overlooked  in  the  pres- 
sure and  importunity  of  more  important  business. 

"Mr.  Gray  sent  me  to  ask  if  his  notes  are  dis- 
counted." 

"  No,  my  lad,  they're  not.  Tell  Mr.  Gray  that  his 
paper  is  too  long."  At  the  same  time,  the  Clerk 
hands  back  the  offering,  which  the  boy  declines,  say- 
ing that  "  Mr.  Gray  told  him  to  leave  it,  and  he 
would  see  the  President  about  it. 

Three  out  of  four  of  all  the  applicants  are  disap- 


212  THE   DISCOUNT   CLERK. 

pointed.  They  leave  the  bank,  knitting  their  brows 
into  frowns  and  nervous  distortions.  Some  mutter 
oaths  of  indignation  at  "  such  infamous  treatment." 
Boys  express  themselves  indifl'erently  by  a  suppressed 
whistle,  or  with  a  "  Pooh !  governor  won't  relish 
that !" 

The  last  thought  that  enters  the  mind  of  any,  is, 
that  there  are  twenty  applicants  for  every  thousand 
dollars  that  the  bank  has  to  dispense. 

Number  Thirty  gets  an  affirmative  nod  from  the 
Discount  Clerk ;  and  the  smile  of  satisfaction  with 
which  he  leaves  the  bank  is  like  a  sunbeam  in  the 
midst  of  winter  clouds.  He  is  such  a  profitable 
customer,  keeping  a  large  balance  on  deposit,  while 
asking  for  comparatively  moderate  accommodations, 
that  the  Directors  dare  not  refuse  him. 

Numler  ThirUj-one. — "  What  luck !" 

"  K  you'll  make  a  note  for  twenty-five  hundred 
dollars  instead  of  five  thousand,  and  put  it  forty-five 
days  instead  of  ninety,  it'll  go  through." 

"  The  deuce !  That  will  only  j)ut  me  to  the  neces- 
sity of  coming  again  next  week ;  and  that's  what  I 
wanted  to  avoid." 

"  You  are  very  fortunate  to  get  any,  I  assure  you. 
The  great  majority  are  disappointed  entirely." 

"  "Well,  I  reckon  a  fellow  miist  be  satisfied  with 
half  a  loaf." 

These  examples  of  conversation  and  incident  are 
sufficient  to  give  a  general  notion  of  the  daily  expe- 
rience of  the  Discount  Clerk. 


Inside.        'ITie  Consequences  of  Two  per  Cent,  a  Month. 


A  FKAHD.  213 

• 

The  Discount  Clerk  handles  no  money.  He  has 
no  occasion  to  touch  a  bank  bill  or  a  piece  of  coin. 
His  business  is  exclusively  with  the  bills  receivable, 
and  with  the  accounts.  The  only  most  obvious 
method  by  which  he  could  perpetrate  a  fraud,  would 
be,  by  abstracting  notes,  and  negotiating  them  through 
other  parties — an  operation  in  which  discovery  would 
threaten  him  at  every  turn.  There  was  an  instance  in 
the  old  Bank  of  the  United  States,  of  a  Clerk  abstract- 
ing notes  after  they  were  discounted  and  filed  away. 
He  selected  those  which  in  his  judgment  would 
be  least  likely  to  be  called  for,  or  referred  to,  before 
maturity,  and  by  the  help  of  a  friend  outside  of  the 
bank,  hypothecated  them  in  an  obscure  channel,  for  a 
loan  of  money.  When  they  were  near  due,  he 
selected  others  of  longer  date  to  substitute  for  them, 
and  restored  them  to  their  proper  place  in  the  files. 
The  trick  was  discovered  by  the  maker  of  one  of  the 
hypothecated  notes  calling  at  the  bank  to  pay  it 
before  its  maturity.  In  banks  of  effective  discipline, 
such  abstraction  of  paper  could  not  long  be  con- 
cealed. 

Discounted  notes,  which  are  payable  in  other  cities, 
are  transmitted  by  mail ;  and  when  advice  of  their 
payment  is  received,  a  Journal  entry  is  made,  charg- 
ing the  collecting  bank,  and  crediting  bills  discounted, 
in  the  usual  commercial  form.  A  remittance  for  the 
balance  liquidates  the  account. 

The  same  end  is  answered  equally  well  by  other 
methods  of  entry. 


214  THE  NOTE   DEPARTMENT. 


CHAPTEK   Vm. 

THE      NOTE      DEPAKTMENT. 

Commerce,  in  its  broadest  sense,  is  carried  on  by 
promissory  notes.  The  multiplication  of  this  form  of 
credit  is  beyond  all  control.  It  loads  every  depart- 
ment of  trade,  from  pins  and  needles  up  to  cargoes  of 
grain  and  cotton.  It  represents  ships,  railroads, 
manufactories,  public  and  private  contracts.  The 
"pass-book"  of  the  housekeeper  is  balanced  by  a 
note  at  three  or  six  months.  The  retailer  purchases 
goods  of  the  jobber,  and  give^  his  note  in  settlement. 
The  jobber  gives  notes  to  the  wholesale  merchant, 
and  he  in  turn  to  the  manufacturer  or  producer.  The 
manufacturer  gives  notes  for  the  raw  material.  The 
factor  is  already  under  acceptance  to  the  grower,  and 
the  grower's  notes  are  given  to  the  banks  long  before 
his  "  fields  are  white  unto  harvest."  The  sugar  that 
reaches  our  wharves  from  Havanna  or  Kew  Orleans 
has  two  or  three  sets  of  notes  predicated  on  it  before 
the  first  hogshead  is  discharged  from  the  vessel ;  and 
it  continues  to  accumulate  notes  as  it  passes  through 
the  hands  of  the  refiner  into  those  of  the  grocer. 
Even  after  it  has  been  swallowed  in  confections,  its 
notes  are  still  floating,  unliquidated,  in  the  market. 
The  market  carries  millions  of  notes  for  what  is 
already  consumed,  and  millions  more  for  what  is  not 


KECEIVING   NOTES   FOR   COLLECTION.  215 

yet  sprouted  in  the  furrow.  Tlie  United  States  Gov- 
ernment has  lately  settled  thirty  millions  of  debt  by 
promissory  notes,  and  is  rapidly  creating  the  neces- 
sity for  a  further  indefinite  issue. 

The  bank  is  the  principal  channel  of  liquidation  for 
all  this  mass  of  notes.  Those  which  are  not  dis- 
counted are  first  entered  on  the  Dealers'  Book  by 
the  clerk,  after  careful  examination.  Informality  of 
indorsement,  obscurity  of  date,  or  other  accident, 
might  make  the  bank  liable  to  the  holder,  although 
it  is  merely  the  collecting  agent.  It  is  the  duty  of 
the  Clerk  to  scrutinize  every  note  narrowly  before 
entering  it,  and  especially  to  see  that  the  owner  is  the 
last  indorser,  that  it  may  not  be  placed  to  a  wrong 
credit,  when  due.  Banks  generally  will  not  receive 
for  collection  notes  which  have  been  disfigured,  or 
changed  after  issue  by  the  drawer ;  nor  will  they 
receive  them  from  strangers  on  any  terms,  even  if 
they  are  correctly  drawn  in  every  respect. 

Promissory  litotes  are  commercial  currency.  They 
are  transferred,  by  indorsement,  from  one  merchant  to 
another,  in  settlement  of  debts,  the  same  as  bank  bills : 
difi'ering  only  in  this — that  they  mature  at  a  stated 
subsequent  time,  and  that  the  other  indorsers  are 
liable  to  the  owner,  in  case  of  non-payment  by  the 
drawer.  An  owner  may  transfer  a  note  to  another, 
by  special  agreement  that  he  is  to  be  held  exempt 
from  such  liability.  This  is  expressed  in  the  indorse- 
ment by  the  words  "  without  recourse,"  above  the 
name  of  the  exempt  indorser. 


216  THE   NOTE   DEPARTMENT. 

The  Collection  Register  is  a  book  of  record  ruled 
in  columns,  so  as  to  describe  the  note  in  a  single  line. 
See  form  on  page  217. 

The  Clerk  marks  on  each  note  the  date  of  its 
maturity.  If  he  should  mark  it  one  day  too  late,  and 
the  drawer  fail  to  pay,  the  bank  would  be  liable  to 
the  owner,  because  the  notice  of  protest  to  the  indors- 
ers  would  be  out  of  legal  time.  Hence  the  import- 
ance of  accuracy  in  this  record.  A  careful  clerk  is 
not  satisfied  without  such  revision  of  his  "timing" 
of  notes  as  to  give  every  possible  guarantee  against 
error. 

Tricky  dealers  "have  been  known  to  mark  a  wrong 
date  of  maturity  on  notes,  for  the  purpose  of  "  catch- 
ing" the  bank  in  this  liability.  The  bank  could  not 
escape  by  showing  the  wrong  date  to  be  that  of  the 
dealer,  unless  it  could  prove  the  intent.  It  is  bound 
to  be  exact  in  its  own  business,  and  can  m-ge  no  legal 
excuse  for  adopting  the  errors  of  others. 

After  the  notes  are  "  timed,"  they  are  numbered 
consecutively  on  the  back  and  end,  and  recorded  in 
the  Register,  from  which  they  are  copied  into  the 
Ticklers. 

A  Tickler  is  a  book  which  exhibits,  when  complete, 
all  the  notes  maturing  within  the  month,  each  under 
its  proper  date  of  payment.  Those  which  fall  due  on 
the  first,  are  transcribed  under  that  date ;  and  those 
that  fall  due  on  the  second,  under  that ;  and  so  on, 
until  the  book  presents  a  consecutive  date  record  for 
the  month.  There  are  twelve  Ticklers  for  each  year, 
and  two  sets — one  for  the  collection,  and  one  for  the 
discounted  notes.     They  are  designated  by  the  name 


FORMS    OF   NOTE   KEGISTEKS. 


217 


5^ 


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s  is  «o  o  ^  O 

1  ^  "»r  IC  (M  50 

t-T^'co't-T 


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218 


THE   NOTl-;   DEPAKTMENT. 


of  the  month — the  January  Tickler,  the  February 
Tickler,  and  so  forth.  There  is  an  auxiliary  set  in  the 
Discount  Department,  for  the  foreign  notes. 


I>-A.a-E      OF     TIOKILEI?,. 

Monday,  June  ls<,  1857. 


5R 

W.  Stimson 

$ 

240 
1,650 
1,000 

600 
5,240 
1,320 

750 
2,250 

110 

48 

10,050 

c. 

no 

fi'> 

S.  Ackley  &  Co 

75 

63 
110 

T.  Watson 

E.  Sickles 

Merchants'  Bank.. 

00 
20 

940 

Bell  &  T 

75 

941 

Corse  &  N 

Mercbants'  Rank . . 

00 

945 

T.  Thomas 

00 

246 
400 
570 

S.  Wilson 

0.  Jones 

G.  Roberts 

14  Pearl  street 

Leather  Bank 

00 
16 

75 

860 

L.  Jackson 

Notice  to  L.  J 

14 

One  of  the  chief  uses  of  the  Tickler  is,  to  facilitate 
the  drawing  of  notes  from  the  packages,  as  the  days 
of  maturity  come  round.  The  record  consists  merely 
of  the  number  of  the  note,  the  name  of  the  payer, 
and  the  amount.  The  residence  of  parties  whose 
names  are  not  in  the  directory  is  given,  to  aid  the 
Kunner  in  serving  notices.  "When  notes  are  made 
payable  at  banks,  that  also  is  set  down  in  the  Tickler, 
to  indicate  that  notice  to  the  drawers  is  not  necessary. 

Application  is  frequent  for  notes  due  at  a  future 
day,  out  of  the  regular  routine  of  business,  either  for 
payment,  examination  of  indorsements,  or  other  pur- 
pose. Reference  to  the  Tickler  gives  the  number, 
and  they  can  be  produced  in  a  second. 

It  is  a  general  rule  of  banks,  that  collection-notes 
should  be  deposited  not  later  than  ten  days  or  a  fort- 


CUSTODY   OB^   NOTES.  219 

night  before  their  maturity,  that  there  may  be  ample 
time  to  pass  them  through  the  various  books,  and  to 
serve  seasonable  notice  on  the  payers.  But  this  regu- 
lation cannot  be  strictly  enforced,  since  merchants  are 
in  constant  receipt  of  short-time  drafts.  Their  col- 
lection-paper is  often  hypothecated  for  temporary 
loans,  or  attached  as  collateral  to  discounted  paper ; 
and  various  other  circumstances  interfere  with  their 
observance  of  the  rule.  "When  notes  are  deposited 
too  near  their  maturity  to  admit  of  notice  being  served 
without  unreasonable  trespass  on  the  time  of  the 
Runner,  it  is  either  dispensed  with,  or  the  depositor 
himself  serves  it. 

The  Clerk  of  this  department  is  responsible  for  the 
safe  keeping  and  production,  at  an  instant's  call,  of 
any  note  or  di'aft  deposited  in  the  bank.  If  payable 
in  the  city,  he  can  exhibit  it ;  if  in  the  country,  he 
can  show  the  course  of  transmission  by  which  it  has 
passed  out  of  his  custody. 

The  Foreign  Note  Register  is  a  book  which  diflPers 
from  the  Domestic  Register,  onlv  in  having  one 
additional  column  for  the  name  of  the  place  where 
the  note  is  payable,  and  another  for  that  of  the  bank, 
to  which  it  is  sent  for  collection  (p.  217). 

It  is  the  practice  of  the  banks  in  JN^ew  York  to 
make  their  collections  for  a  district  of  country 
through  some  one  bank,  which  has  an  established 
correspondence  with  all  parts  of  it.  For  instance,  a 
bank  in  Albany  or  Troy  will  coUect  notes  in  all  the 
adjacent  counties  more  promptly  and  cheaply  than  it 


220  THE   NOTE   DEPARTMENT. 

could  be  done  by  separate  correspondence  of  the  city 
bank  with  each  town. 

On  this  plan  the  Clerk  opens  another  book,  and 
records  on  a  page  appropriated  to  the  Bank  of  Albany, 
all  notes  that  fall  within  that  collection  circuit.  He 
writes  or  stamps  on  the  back  of  each,  below  all  other 
indorsements : 


PAT    BANK    OF    ALBANY. 


Under  this  the  Cashier  signs  his  name;  and  the 
letter  enclosing  the  notes,  after  being  copied,  is  sent 
to  its  address  by  mail. 


THE   BOOK-KEEPER.  221 


CHAPTER  iX. 

THE      BOOK-KEEPEK. 

At  first  sight,  nothing  is  more  simple  than  the  keep- 
ing of  a  bank-ledger  of  personal  accounts.  All  that 
is  to  be  done  is,  to  post  the  deposits  of  a  dealer  to  his 
credit,  and  the  checks  to  his  debit.  His  Bank-book 
must  be  "  written  up"  to  correspond  with  the  Ledger, 
and  balanced  from  time  to  time,  as  a  mutual  test 
between  them. 

The  first  requisite  of  a  bank  Book-keeper  is,  a  fair 
style  of  writing.  It  is  more  essential  to  write  plainly 
than  elegantly.  To  a  bank  ofl&cer,  the  flourishes  and 
fine  hair-strokes  of  an  accomplished  penman  are  like 
foppery.  He  wants  to  see  full,  strong  figures,  that 
can  be  distinguished  from  each  other  at  a  glance  : 
add  to  this,  that  they  must  be  set  down  in  columns — 
units  under  units,  and  tens  under  tens — and  the  most 
important  requisitions  for  bank  book-keeping  are 
answered.  The  Clerk  must  be  ready  at  addition  and 
subtraction,  with  a  habit  of  prompt  and  accurate 
transcription. 

Moderate  as  these  requirements  are,  our  city  banks 
have  frequent  cause  to  complain  of  inefiiciency  in 
their  book-keepers.  Ledgers  are  not  regularly  bal- 
anced. They  gradually  fall  behind,  and  it  is  extreme- 
ly difficult  to  bring  them  up  again;   for  the  accu- 


222  THE  BOOK-KEEPEB. 

mulation  of  figures  never  ceases.  An  account  cannot 
be  stopped  short,  subject  to  the  convenience  or  tardi- 
ness of  the  Clerk.  The  whole  Ledger,  with  its  five 
hundred  accounts,  has  hundreds  of  postings  added  to 
it  every  day.  The  reason  why  so  many  Book-keepers 
fail,  is  not  for  want  of  capacity,  but  because  of  poor 
system,  or  no  system  at  all. 

The  number  of  Book-keepers  in  a  bank  is  in  pro- 
portion with  the  number  of  its  dealers.  Three  or 
four  hundred  accounts  may  be  kept  in  a  single  ledger ; 
but  where  there  are  twelve  or  fifteen  hundred,  as  in 
the  Metropolitan  Bank,  and  others  of  the  same  rank, 
four  ledgers  are  necessary,  and  a  clerk  to  each.  The 
dealers  are  classed  alphabetically.  All  names  begin- 
ning with  the  lettei-s  from  A  to  F  are  assigned  to  the 
first  ledger ;  those  from  G  to  L,  to  the  second ;  those 
from  M  to  R,  to  the  third,  and  those  from  S  to  Z,  to 
the  fourth. 

A  ledger  of  the  usual  size  contains  twelve  hundred 
pages.  On  the  supposition  that  four  hundred  accounts 
are  to  be  opened  in  it,  it  would  be  very  easy  to 
aiTange  them  alphabetically,  assigning  three  pages  to 
each.  But  the  result  of  this  would  be,  total  disorder, 
after  the  ledger  has  been  in  use  a  short  time.  Some 
accounts  will  show  but  one  deposit  and  three  or  four 
checks  in  a  week,  while  others  have  twice  that  many 
for  every  day — which  would  soon  make  it  necessary 
to  transfer  them  from  page  to  page,  and  so  destroy 
the  arrangement.  There  is  another  difficulty  to  be 
provided  against :  when  a  ledger  is  begun  in  a  new 
business,  the  clerk  has  no  prepared  list  of  names  in 
an  index  to  apportion ;  these  will  come  in  the  pro- 


THE   BOOK-KEEPER.  223 

gress  of  the  business.  To  meet  this  case,  and  also  the 
fact  that  the  letters  of  the  alphabet  are  not  equally 
fruitful  in  proper  names,  a  complete  system  of  appor- 
tionment has  been  devised,  which  shows,  that  in  a 
ledger  of  1200  pages,  68  should  be  appropriated  to 
names  beginning  with  A,  88  to  B,  136  to  C,  52  to  D, 
only  8  to  Q,  6  to  Y,  and  but  one  to  the  letter  X ; 
that  is  to  say,  that  the  number  of  proper  names 
beginning  with  C  is  about  double  the  number  begin- 
ning with  A,  and  seventeen  times  greater  than  those 
with  Q.  This  apportionment  is  based  on  a  careful 
examination  of  directories,  encyclopedias,  dictionaries, 
library  catalogues,  gazetteers,  and  other  alphabetical 
works ;  and  although  it  embraces  the  names  of  objects 
and  places,  it  may  be  assumed  as  correct  for  all  prac- 
tical uses  in  book-keeping. 

The  "  vowel  order"  is  generally  adopted  in  the  dis- 
tribution of  accounts,  and  the  apportionment  under 
this  also  has  been  determined  with  great  accuracy. 
For  example,  the  136  pages  in  C  must  be  appro- 
priated as  follows : 

To       Ca^     Ce,     Ci,     Co,     Gu,     Cy, 

48,     12,     12,     48,     12,      4,     pages. 

This  is  the  order  in  which  every  ledger  should  be 
opened,  to  obtain  the  full  aid  of  classification  to  the 
memory.     It  gives  the  following  result : 

a,  e,  {,  0,  u,  y, 

Charlton,     Cresson,      Chisholm,      Corwin,      Cruden,      Clymer, 
Candy,         Crewel,       Crisp,  Crowell,      Church,      Cryder, 

Carter,         Creamer,    CliflFord,         Corning,    Cludius,     Clyde. 


224:  THE   BOOK-KEEPER. 

Il;'"all  the  accounts  in  all  the  ledgers  of  a  bank  are 
opened  in  this  order,  the  economy  of  time  must  be 
very  sensibly  felt  in  conducting  the  business ;  and  it 
is  not  too  much  to  say,  that  neglect  of  such  arrange- 
ment will  inevitably  expose  it  to  errors,  inaccuracies, 
and  greater  expenses. 

The  continual  changes  arising  from  the  discon- 
tinuance of  old,  and  the  accession  of  new  accounts, 
make  it  impossible  to  preserve  a  stricter  alphabetical 
order  than  is  obtained  by  following  the  inflecting 
vowel. 

The  number  of  blank  pages  to  be  left  for  each 
account  depends  on  the  frequency  of  transactions,  and 
must  be  left  to  the  judgment  of  the  Book-keeper, 
The  time  occupied  in  laying  out  his  plans,  and  reduc- 
ing everything  to  a  regular  system,  will  return  to  him 
a  thousand-fold  in  the  general  economy  .of  his  work. 

The  Certification  Check-list,  on  page  115,  being 
the  same  in  its  rulings  and  forms  of  entry,  may  repre- 
sent equally  well  the  Second  Teller's  Cash-book,  sup- 
posing the  entries  to  be  deposits  instead  of  checks. 
The  Book-keeper  who  has  the  Ledger  from  S  to  Z, 
extends  into  his  column  the  deposits  of  Slater  &  Co., 
E.  West  &  Co.,  and  Wood  &  Carpenter ;  and  in  like 
manner,  each  other  Book-keeper  makes  the  extensions 
which  belong  to  his  column,  and  the  amounts  are 
posted  to  the  credit  of  the  depositors  in  the  Ledgers. 
At  the  close  of  the  day,  the  footings  of  the  several 
columns  are  brouglit  together,  as  in  the  example,  and 
their  sum  must  agree  with  the  addition  of  the  main 
column.     This  process  of  receiving  and  posting  goes 


BALANCING    ACCOUNTS.  225 

on  with  short  intervals  until  three  o'clock,  the  alter- 
nate Cash-book  being  substituted  on  the  Teller's  desk, 
while  the  Book-keepers  use  the  other.  In  the  same 
waj  precisely  the  proceeds  of  collection  notes  are 
posted  to  the  Ledger.     See  page  191. 

It  appears  by  their  Bank-book,  on  page  161,  that 
Slater  &  Co.  have  deposited  at  various  dates  the 
suras  that  are  attested  by  the  initial  of  the  Teller's 
name,  A.  They  have  received  credit  also  for  bills 
discounted,  $22,363.18,  and  for  the  notes  of  Jones,  and 
Brown,  from  the  former  of  which  $12.50  is  deducted 
for  exchange  or  expenses  of  collection.  This  is  all 
the  variety  there  is  in  bank  credits.  It  exemplifies 
all  the  entries  that  are  made  on  every  dealer's  book 
to  his  credit.  The  checks  drawn  by  Slater  &  Co., 
from  June  19  to  July  16,  are  charged  on  the  opposite 
page,  and  th^  balance  $18,819.84  is  carried  down  as 
a  new  starting-point  in  their  dealings,  corresponding 
with  the  statement  of  their  account  in  the  Ledger. 

The  transposition  of  the  columns  of  figures,  and  of 
the  heading  of  the  Bank-book,  so  as  to  read  ^^  Slater 
S  Co.  in  a/o  with  the  Commercial  Barik^''  would 
make  an  exact  copy  of  the  account  of  Slater  &  Co.,  as 
it  appears  in  the  Ledger. 

All  checks  paid  by  the  Paying  Teller,  and  all  that 
are  received  in  deposit,  or  for  notes  at  the  desks  of  the 
Second  and  Third  Tellers,  are  cancelled  by  them, 
and  handed  over  to  the  Check  Clerk.,  by  whom  they 
are  recorded  in  books,  called  Check-lists,  from  which 
they  are  posted  to  their  proper  ledger  accounts  by  the 
Book-keepers.  The  cancelling  of  checks  consists  in 
passing  them  on  to  a  wire  over  a  blade,  which  cuts 

10* 


226  THE   BOOK-KEEPER. 

them,  so  that  if  they  should  be  lost  and  presented  a 
second  time,  they  would  be  known  as  old  checks 
already  paid.  Each  Teller  has  a  distinctive  cancel- 
ling cut,  which  at  any  future  time  indicates  the  desk 
at  which  the  check  was  paid. 

Many  dealers  draw  twenty  or  thirty  checks  almost 
every  day.  These  are  entered  singly  on  the  Check- 
list in  an  inner  column,  extended  in  one  sum  into  a 
main  column,  and  posted  to  the  Ledger  in  one  sum, 
to  economize  the  page.  When  the  Book-keeper 
"  writes  up"  a  dealer's  account,  he  copies  the  amount 
of  each  check  from  the  list  into  his  Bank-book,  and 
if  no  mistake  has  been  made,  the  book-balance  and 
the  ledger-balance  will  agree.  Then  he  compares  the 
cancelled  checks  with  the  record  on  the  dealer's  book, 
and  thus  arrives  at  a  double  test  of  the  accuracy  of 
the  account.  , 

Connected  with  each  Book-keeper's  desk  is  a 
drawer,  divided  into  boxes  like  the  money-drawers, 
in  which  the  checks  are  kept  distributed,  those  of 
each  dealer  separate  from  all  others.  If  a  dealer 
should  come  in  at  any  moment,  in  the  apprehension 
that  a  forged  check  had  been  paid  against  his  account, 
the  Book-keeper  can  produce  all  his  checks,  instantly,, 
for  examination. 

It  is  of  the  first  importance,  that  the  Book-keeper 
post  the  deposits  and  checks  (more  particularly  the 
latter)  as  fast  as  they  come  in ;  and  keep  both  sides 
of  every  account  in  the  Ledger  added  up  in  pencil, 
that,  if  he  should  be  absent,  either  of  the  Tellers  may 
ascertain  at  a  glance  whether  a  check  is .  good.     If 


THE   book-keeper's   MEMORY.  227 

present,  he  can  answer  from  memory  as  to  the  condi- 
tion of  the  active  accounts.  It  is  not  necessary  that 
he  shall  always  know  the  exact  balance  of  an  account, 
to  tell  whether  checks  against  it  may  be  safely  paid 
or  certified.  Long  familiarity  with  it  enables  him  to 
answer  on  the  instant,  without  interrupting  even  the 
additions  in  which  he  may  be  engaged.  The  Paying 
Teller  asks : 

"  Is  Edward  Wilson's  account  good  for  ten  thou- 
sand dollars?" 

"  Yes — for  twenty  on  top  of  it." 

"  Can  I  certify  Peter  Smith's  check  for  five  hun- 
dred dolls?" 

"No — not  for  five  hundred  cents  !" 

"  How  does.  Robert  Taylor's  account  stand  ?" 
"  He  has  about  sixteen  hundred  dollars  here." 

The  Book-keeper  may  not  have  seen  either  of  these 

accounts  for  a  week  ;  but  he  knows  them  by  heart. 
One  of  the  officers  requests  him  to  open  the  Ledger 

to  John  Brown's  page. 

"  "What  sort  of  an  account  does  he  keep  ?" 

"  Very  poor — a  mere  tax  on  the  bank." 

"  How's  that  ?    He  seems  to  make  large  deposits  !" 

"  Yes,  sir  ;  but  the  Exchange  checks  consume  them 

every  morning,  almost  to  the  last  dollar." 
"  Does  he  ever  overdraw  ?" 
"  No,  sir  ;  but  always  lean." 
John  Brown  does  not  succeed  in  getting  the  loan 

he  applied  for.     Neither  does  he  know  how  com- 


228  THE   BOOK-KEEPEK. 

pletely  the  Book-keeper  has  destroyed  his  chances  for 
the  future. 

Many  accounts  appear  on  the  Ledger  with  a  run- 
ning balance  of  thousands  of  dollars,  when,  in  fact, 
nearly  every  thing  is  drawn  out  by  the  Exchange 
checks — a  very  important  point  to  be  watched  by  the 
Book-keeper.  In  stating  balances,  the  Exchange 
checks  are  always  deducted  from  the  apparent  bal- 
ance at  the  close  of  the  previous  day.  Thus,  if  John 
Brown  had  a  balance  of  twelve  thousand  dollars  on 
the  Ledger  at  night,  and  his  checks  for  eleven  thou- 
sand five  hundred  dollars  should  come  in  through  the 
Clearing  House  on  the  next  morning,  his  balance  of 
account  would  be  reported  at  five  hundred  dollars. 

The  statement  of  balances  made  on  the  Ofiering 
Book  is  generally  an  average  for  the  previous  month. 
Heavy  deposits,  which  dealers  sometimes  borrow  to 
swell  their  account  on  the  day  or  two  before  offering 
notes  for  discount,  go  for  nothing. 

The  freedom  of  the  Book-keeper's  accounts  from 
all  complexity  leaves  him  without  excuse  for  errors. 
He  has  no  original  entries  to  make,  and  there  is  no 
variety  of  transactions,  as  in  mercantile  affairs.  There 
are  no  different  currencies,  and  there  is  no  mixing  of 
work  between  different  ledgers.  Each  Book-keeper 
has  exclusive  control  of  his  own,  with  such  division 
of  labor  and  susceptibility  of  proof,  at  every  step,  as 
ought  to  assure  positive  correctness.  The  officers, 
therefore,  hold  him  to  very  strict  account.  Their 
presumption  is,  that  errors  can  come  about  only  by 
inattention — not  by  want  of  capacity ;  and  the  con- 


ALEXANDER   JONES.  229 

sequences  of  inattention  may  be  too  serious  to  admit 
that  as  an  excuse.  For  example :  the  posting  of 
John  Brown's  deposit  of  one  thousand  dollars  to  the 
credit  of  Alexander  Jones,  would  give  the  latter  a 
chance  to  draw  it  out ;  and  Brown  may  not  want  to 
use  any  money  for  a  month.  His  check  then  appears 
as  an  overdi*aft,  and  the  Book-keeper  sends  him  a 
note : 

"  Commercial  Bank,  June  18th,  1857. 
"  John  Brown,  Esq. : 

"  Your  account  appears  overdrawn  $1,000.  Please 
deposit  that  amount,  and  send  your  book  to  be  writ- 
ten up. 

"  For  the  Cashier,  W.  Green, 

JBook-heepery 

This  is  a  printed  form,  which  the  clerk  fills  up 
with  the  name  of  the  delinquent,  and  the  amount. 

Ml".  Brown  very  promptly  appears,  with  his  Bank- 
book, to  prove  that  he  had  the  money  in  bank ;  and 
the  Book-keeper  then  discovers  his  error.  The  post- 
ing is  immediately  corrected,  and  the  overdraft 
thrown  upon  Jones,  who  is  unable  to  pay,  and  the 
bank  loses.  The  rule  of  revision  is,  that  after  the 
credits  have  been  posted,  they  shall  be  checked  off 
between  the  Ledger  and  the  Cash-Books,  either  after 
banking  hours  on  the  same  day,  or  before  the  begin- 
ning of  business  on  the  next  day. 

The  balancing  of  the  dealers'  books  is  one  of  the 
most  laborious  parts  of  the  Book-keeper's  duty.  It  is 
the  practice  to  "rule  off"  the  Ledgers  on  the  last 
day  of  every  month,  for  the  purpose  of  making  the 
monthly  Proof-sheet.    The  additions  of  the  account, 


230  THE   BOOK-KEEPEK. 

and  the  balance  carried  down,  are  commonly  left  in 
pencil,  until  their  accuracy  is  tested  by  agreement 
with  the  dealer's  book.  Dealers  are  requested  to 
leave  their  books,  at  the  end  of  every  month,  for 
this  test. 

The  monthly  Proof-sheet  of  the  Book-keeper  is 
simply  a  list  of  all  the  balances  on  his  Ledger,  Avhich, 
added  together,  must  agree  with  the  amount  of 
deposits  posted  in  gross  to  the  General  Ledger.  A 
skillful  and  accurate  Book-keeper  will  generally  lay 
this  Proof  complete  on  the  Cashier's  table,  on  the 
first  or  second  day  of  each  month.  Otherwise,  the 
Cashier  calls  on  him  to  know  the  reason  of  delay. 

Tlie  Book-keeper,  like  every  other  clerk,  has  his 
share  of  interruptions  and  annoyances.  A  dealer, 
whose  own  carelessness  has  led  to  an  overdraft  of  his 
account,  takes  fire  at  the  notice  thereof,  and  throws 
his  book  on  to  the  open  Ledger,  demanding  that  it 
shall  be  immediately  balanced.  Others  want  omitted 
deposits  entered,  or  bills  discounted,  and  collection 
notes  written  in  at  unseasonable  times.  Many  call  to 
know  what  the  balance  of  their  account  is ;  and  are 
surprised  to  learn  that  it  is  less  than  one  hundred 
dollars,  when  it  ought  to  be  over  a  thousand.  "  Hav'n't 
you  made  some  mistake  in  the  additions?  Is  that 
last  discount  of  mine  entered  ?  Hav'n't  you  charged 
me  with  a  wrong  check  ?  "Won't  you  be  good  enough 
to  get  out  my  checks,  and  let  me  examine  them,"  &c. 

The  Book-keepers  have  no  direct  connection  with 
the  money  department ;  but  they  may  be  accessory 
to  fraud,  and  successfully  conceal  it  for  a  long  time. 


A   FRAUD.  231 

A  recent  case  occurred,  in  a  city  bank,  of  collusion 
with  a  dealer,  in  which,  by  altering  figures  on  the 
various  books,  nearly  a  hundred  and  thirty  thousand 
dollars  were  embezzled.  Such  a  daring  act  of  forgery 
as  this,  is  fortunately  beyond  the  reach  of  common 
hardihood;  and  therein  consists  a  better  security 
against  it,  than  can  result  from  any  degree  of  vigi- 
lance by  bank  ofiicers.  "Where  one  attempt  of  the 
kind  would  succeed,  forty  would  fail  from  lack  of 
impudence  in  the  guilty  person,  if  not  from  some  weak- 
ness of  a  less  disgraceful  character.  It  is,  neverthe- 
less, the  duty  of  bank  managers  to  adopt  precautions 
against  the  most  unlikely  frauds;  and  it  has  been 
proposed  that  the  Clerks  should  serve  in  rotation  at 
the  respective  desks,  so  as  to  increase  the  chances  of 
detection,  or  to  shorten  the  term  of  its  possible  con- 
cealment, if  collusion  should  be  attempted  between 
the  clerk  and  the  dealer. 

The  Book-keeper  is  generally  employed  about  seven 
or  eight  hours  a  day.  In  that  time,  with  diligence 
and  economy  of  minutes,  he  may  keep  a  Ledger  of 
twelve  hundred  pages  and  four  hundred  accounts  in 
perfect  order. 

For  a  Ledger  of  three  hundred  pages,  the  following 
scale  is  to  be  divided  by  4 ;  for  one  of  six  hundred 
pages,  by  2 ;  and  so  by  any  number  that  leaves  no 
remainder. 


232  THE   BOOK-KEEPER. 


Scale  of  Apportionment  for  a  Ledger  of  1200  pages. 
From  "Gould's  Universal  IndexP 


(Z, 

^, 

h 

0, 

W, 

y- 

A, 

1 

16 

32 

52 

64 

68 

B, 

72 

96 

116 

124 

144 

166 

c, 

160 

208 

220 

232 

280 

292 

D, 

296 

308 

320 

328 

336 

844 

E, 

348 

368 

384 

396 

400 

400 

F, 

404 

412 

424 

436 

456 

456 

G, 

460 

472 

480 

488 

492 

492 

H 

496 

508 

516 

524 

636 

540 

I, 

544 

548 

556 

560 

560 

560 

J, 

664 

568 

568 

572 

580 

680 

K, 

584 

588 

596 

600 

600 

600 

L, 

604 

612 

620 

628 

636 

636 

M, 

640 

672 

676 

684 

700 

704 

N, 

•708 

712 

720 

728 

736 

736 

0, 

740 

744 

752 

756 

766 

756 

P, 

760 

788 

808 

824 

836 

844 

R, 

848 

856 

868 

876 

896 

900 

s, 

904 

924 

956 

996 

1016 

1016 

T, 

1020 

1036 

1044 

1056 

1084 

1092 

u, 

1096 

1100 

1104 

1104 

1104 

1104 

V, 

1108 

1120 

1120 

1124 

1124 

1124 

W 

1128 

1140 

1152 

1172 

1180 

1180 

X, 

1184 

1184 

1184 

1184 

1184 

1184 

Y, 

1184 

1184 

1188 

1188 

1188 

1188 

z, 

1192  to 

1196 

Q, 

1196  to 

1200. 

METHOD   OF   ACCOUNTS.  233 


CHAPTEE    X. 

THE      GENERAL      BOOK-KEEPEK. 

This  Clerk  derives  his  title  from  the  character  of 
the  accounts  in  his  Ledger,  which  are  general^  in  dis- 
tinction from  individual  or  .personal;  and  also,  from 
the  fact  that  he  brings  together  the  general  results  of 
the  business,  which  appear  in  the  BanJc  Statement. 

In  rank,  the  General  Book-keeper  stands  at  the 
head  of  the  department  of  accounts.  He  takes  pre- 
cedence of  the  Discount  Clerk,  and  is  often  regarded 
as  equal  with  the  Tellers,  rather  than  below  them. 
The  object  of  describing  in  advance  several  of  the 
inferior  desks,  is  to  show  the  origin  of  all  the  different 
entries  which  are  posted  to  his  Ledger. 

The  books  of  a  bank  are  kept  by  double  entry, 
though  this  is  not  always  apparent  in  one  book,  but 
in  the  whole,  as  one  set.  Thus,  the  footings  of  the 
Discount  Books,  and  of  the  extension  columns  of  the 
Cash  Books  of  the  Second  and  Third  Tellers,  are  posted 
in  gross  on  the  General  Ledger  to  the  debit  of  the 
respective  ledgers  to  which  the  personal  credits  are 
carried,  and  the  footings  of  the  several  check-lists 
are  posted  in  gross  to  the  credit  of  those  ledgers ;  con- 
sequently, the  balance  must  show  what  amount  of 
deposits  there  is  on  the  personal  ledgers,  respectively. 


234  THE  GENEKAL  BOOK-KEEPER. 

This  method  furnishes  the  test  of  accuracy  in  the 
monthly  Proof  sheets. 

When  a  bank  begins  business,  the  General  Book- 
keeper debits  Cash  to  Capital.  The  cash  is  transferred 
to  the  Paying  Teller,  and  the  corresponding  entries 
are  then  found  in  the  General  Ledger  and  in  the 
Paying  Teller's  Proof.  The  entire  check-list  of  the 
bank  continues  to  be  credited  daily  to  the  Paying 
Teller,  and  all  the  receipts,  including  those  from  the 
Clearing  House,  charged  to  him.  It  follows  that  the 
Teller's  daily  Proof,  if  correct,  must  agree  with  the 
balance  of  the  Cash  account  on  the  Ledger. 

A  separate  account  is  kept  of  the  different  denomi- 
nations of  circulating  bills  which  are  issued  by  the 
bank ;  also  of  the  securities  pledged  with  the  Bank 
Department  for  their  redemj)tion. 

The  General  Book-keeper  posts  daily  the  liquida- 
tions and  the  accessions  of  Bills  Discounted  to  that 
account,  and  the  balance  shows  what  the  addition  of 
the  Ticklers  should  be,  and  precisely  what  amount 
of  bills  receivable  should  be  on  hand.  The  Certifica- 
tion account  shows  the  balance  of  outstanding  certi- 
fied checks. 

He  posts  to  Expense  account  all  salaries,  rents,  and 
expenditures ;  likewise  the  debits  and  credits  to  Inter- 
est, Exchange,  and  other  accounts  of  this  class.  These 
are  finally  absorbed  in  Profit  and  Loss,  when  the 
books  are  made  up  for  a  dividend.    .„ 

He  keeps  all  the  accounts  with  foreign  banks, 
charging  them  with  notes  sent  for  collection,  and  cre- 
diting remittances ;  and  renders  to  them  a  monthly 
account  current,  or  receives  one,  as   the  case  may 


THE   BAJfK   STATEMENT.  235 

be.  In  some  banks  this  is  too  heavy  a  service  for 
one  clerk,  especially  where  interest  is  allowed  on 
balances :  the  duties  are  then  divided. 

From  the  footings  or  balances  of  these  various 
accounts  is  composed  the  Bank  Statement  (see  pages 
236-237),  designed  to  show  at  a  single  view  the  con- 
dition of  the  business.  Unimportant  details  are  omit- 
ted in  the  example,  as  they  would  serve  rather  to 
confuse  than  to  inform  the  general  reader. 

Most  of  the  items  are  sufficiently  explained  in  the 
record.  The  "Commercial  Bank  notes,"  $102,524, 
is  the  unused  portion  of  the  circulation,  which  the 
Paying  Teller  retains  in  his  drawer.  "  Cash  items" 
are  unexchangeable  funds,  such  as  uncurrent  bills, 
foreign  or  informal  checks,  and  memoranda  which 
represent  money.  The  item,  $1,127,205.33  is  the  pre- 
pared Exchange  for  the  Clearing  House.  All  the 
sums  on  this  side  are  actual  resources  which  would 
be  available  in  liquidating  the  debts,  excepting  that 
set  down  to  Expenses,  which  stands  as  an  offset  to  the 
profits  on  the  other  side. 

The  liabilities  are  due  either  to  the  stockholders,  to 
individuals,  or  to  other  banks.  To  the  former  belong 
the  capital,  and  the  profits — including  the  unpaid 
dividends.  The  circulating  bills,  $358,248,  are 
covered  by  the  securities  on  the  other  side  of  the 
account,  $416,490.66.  The  remainder  of  the  column, 
amounting  to  $6,839,396.63,  is  the  debt  due  to  depo- 
sitors, the  certified  checks  and  the  certificates  of 
deposit,  being  substantially  a  part  thereof. 

"Profit  and  loss  in  reserve,"  $301,378.20,  is  the 
surplus  of  profits  left  after  declaring  the  previous 


236 


THE   GENERAL   BOOK-KEEPEE. 


ST.A.TE]VEBIvrT,    TEB-    18,    1857, 


Resources : 

Bills  discounted 

Loans  on  demand 

Expense  account 

Securities  deposited  with  the 
Bank  Department,  consisting 
of  Stocks  of  the  U.  S.  and  of 
the  State  of  New  York 

Cash  on  hand  : 

Commercial  Bank  notes 

Cash  items— 1st  Teller,  8,423.10 
2d  "  14,200.00 
3d      "         7,982.23 


Bills  and  checks  of  city  banks. 
Specie 


Real  estate .... 
Treasury  Notes. 


102,524 


30,605 
1,127,205 
2,791,499 


00 


7,382,812 

400,000 

1,640 


416,490 


4,051,833 
179,916 
181,403 


12,614,097    23 


66 


dividend.  The  several  items  composing  the  sum  of 
$109,797.90,  constitute  the  profits  of  the  current  divi- 
dend period  up  to  the  date  of  the  statement.  These 
profits  will  be  increased  by  the  end  of  that  period 
(June  30),  and  form  a  fund  sufficient  to  pay  the 
expenses  of  the  bank,  and  the  usual  semi-annual  divi- 
dend, leaving"  a  remainder  to  be  added  to  the  reserved 
profits.  In  this  way,  the  reserve  is  increased  every 
half  year,  by  whatever  excess  of  profits  may  be  realized. 

To  ascertain  the  eacact  profits  of  the  bank  at  any 
time,  interest  on  the  unmatured  bills  discounted,  must 
be  subtracted  from  the  apparent  profits  in  the  State- 
ment. 

This  Statement,  for   practical  purposes,  may  be 


THE   BANK   STATEMENT. 


237 


OF    THE    GOlS/US/CEJEiCiXJiLJi.   B-A-l^IT. 


Liabilities  : 

Capital 

Profit  and  loss  in  reserve. 

Exchange  account 

Interest  account 

Discount  received 


Circulation : 

Bills  on  hand  (see  opposite). 

Bills  in  circulation 


Unpaid  dividends 

Due  depositors : 

City  depositors 

Foreign  banks 

Certified  checks  outstanding.... 
Certificates  of  deposit 


1,250 

1,500 

10'7,04'7 


102,524 
265,724 


3,989,059 

2,262,710 

444,999 


5,000,000 
301,378 


109,797 


358,248 
5,276 


6,696,769 
142,627 


12,614,097  23 


90 


reduced  to  fewer  terms.      The  entire  debt  of  the 
bank  is : 


To    stockholders,   the    capital    and 

profits 

To  depositors,  including  bill-holders 

To  pay  which  the  bank  has : 
Bills  discounted   .  .  .  $7,782,812.96 
Exchangeable  funds  .   1,260,334.66 

Specie 3,389,392.80 

Keal  estate 179,916.81 

Expenses  (chargeable 


$5,416,452.60 
7,197,644.63 

$12,614,097.23 


against  profits) 


1,640.00— $12,614,097.23 


238  THE   GENERAL  BOOK-KEEPEK. 

The  point  from  which  the  Directors  regard  the 
Statement,  and  which  governs  the  discount  of  paper, 
is,  the  ability  of  the  bank  to  redeem  that  portion  of 
its  debt  which  is  demandable  by  the  creditors.  In 
this  case,  it  is  $7,197,644,63 ;  for  the  stockholders 
cannot  demand  back  the  capital  or  profits,  until  all 
other  debts  are  paid.  They  are,  corporately,  the  bank 
itself.  The  bank  has  specie— $3,389,392.80,  by  which 
it  could  reduce  its  debt  to  $3,808,251,83 ;  and  to  pro- 
vide for  this,  it  has  more  than  twice  that  amount  of 
bills  discounted,  in  current  maturity,  to  say  nothing 
of  its  real  estate.  This  would  be  called  a  very  strong 
position.  Allowing  that  one  million  of  dollars  is  a 
sufficient  average  of  specie  to  hold  in  reserve  with  a 
deposit  of  seven  millions,  the  bank  might  safely 
increase  its  discount  line  very  materially.  The  only 
question  then  left  for  the  Directors  to  determine  is, 
whether  the  deposits  of  the  bank  are  likely  to  be 
maintained ;  and  to  judge  of  this  contingency,  they 
have  the  successive  statements  of  the  business,  run- 
ning back  for  years,  showing  the  average  on  which 
they  can  depend.  The  general  condition  of  com- 
merce must  also  be  considered. 

These  are  the  principal  views  that  govern  the 
councils  of  bank  directors. 

The  certificates  of  deposit  specified  in  the  Bank 
Statement  are  issued  to  persons  who  keep  no  regular 
account  in  a  bank,  and  who  merely  deposit  their  funds 
for  safe-keeping.  This  document  is  frequently  used 
as  a  bank  check  in  remittance,  and  is  of  equal  credi- 
bility, though  subject  to  a  slight  discount  when  nego- 
tiated at  a  distance  from  the  redeeming  bank. 


THE   STOCK    LEDGER.  239 

The  General  Book-keeper  mostly  has  the  Stock- 
ledger  and  Transfer-books  in  his  custody.  The  former 
is  opened  in  alphabetical  order  like  other  ledgers, 
and  each  stockholder  is  credited  with  the  shares 
standing  in  his  name.  "When  he  sells  them,  he  fills 
up  a  form  in  the  book  of  printed  transfers  in  favor 
of  the  buyer,  whose  credit  for  the  same  is  balanced 
by  the  debit  of  the  seller.  'No  transfer  of  stock  is 
allowed  without  the  surrender  of  the  old  certificate. 
It  is  cancelled,  and  a  new  one  issued  in  the  name  of 
the  new  holder. 

From  time  to  time,  the  ledger  is  proved  by  making 
out  a  list  of  the  stockholders  with  the  number  of 
shares  held  by  each,  which  multiplied  by  their  par 
value,  should  give  the  exact  capital  of  the  bank.  This 
proof  is  necessarily  made  three  times  in  a  year — twice 
to  ascertain  who  is  entitled  to  receive  dividends,  and 
once  to  know  who  has  a  right  to  vote  for  directors. 
The  transfer  books  are  closed  for  a  short  time  previous 
to  the  payment  of  the  dividend,  to  prevent  wrong 
payments  by  an  inaccurate  list. 

The  Officers  and  Directors  of  the  bank  repose  much 
confidence  in  the  General  Book-keeper.  He  is  con- 
stantly referi'ing  to  all  the  different  books  and  desks, 
to  get  postings  for  his  own  ledger,  and  is  so  familiar 
with  their  theory,  and  also  with  the  various  methods 
by  which  an  account  may  be  mystified,  that  even  his 
casual  supervision  is  regarded  as  of  great  value  to 
the  institution.  He  is  generally  employed  about 
seven  or  eight  hours  a  day. 


240  THE   ASSISTANT  TELLER. 


CHAPTER    XI. 

THE      ASSISTANT      TELLER. 

The  chief  duty  of  this  clerk  is  to  assist  the  Paying 
Teller  in  counting  the  Exchanges  from  the  Clearing 
House,  and  the  Deposit  Teller  in  distributing  and 
counting  the  money  received  by  him.  He  is  also 
regarded  as  a  pupil  in  the  money  department  of  the 
bank,  and  is  required  to  fill  the  place  of  the  Second 
or  Third  Teller,  if  either  should  be  absent.  There 
would  be  hazard  in  employing  a  clerk  in  this  capacity 
who  is  not  familiar  with  bank  bills. 

When  the  Exchanges  are  brought  in  from  the 
Clearing  House,  the  Assistant  Teller  immediately 
begins  to  examine  and  count  them  on  a  separate 
table.  The  items  are  checked  by  a  pencil-mark, 
which  distinguishes  the  bank  bills  from  the  checks. 
He  marks  each  check  with  the  number  of  the  sending 
bank,  so  that  if  a  question  should  arise  subsequently 
as  to  the  channel  through  which  it  was  received,  the 
number  would  indicate  it.  Thus  all  checks  received 
from  the  Bank  of  America,  would  be  found  to  have 
the  figure  6  upon  them  ;  and  all  received  from  the 
Irving  Bank  would  be  known  by  the  number  34.* 
Those  which  are  paid  at  the  counter  by  the  Tellers, 

♦  See  the  Numerical  List,  on  pages  163, 164, 


EXAMINING   THE   EXCHANGES.  241 

have  no  number  marked  on  th.em,  but  are  distin- 
guisbed  by  the  peculiarity  of  tbe  cancelling  cut.  As 
the  Assistant  completes  tbe  examination  of  each  list, 
tbe  addition  included,  be  laj^s  tbe  cbecks  and  bank 
bills  in  separate  piles ;  and  every  list  is  tbus  proved 
by  itself.  Tbe  bank  bills  are  then  counted  into 
packets,  and  tbe  cbecks  entered  on  tbe  Chech-list  by 
another  clerk.  Tbe  sum  of  the  two  must  agree  with 
the  total  of  the  Exchanges. 

Before  the  checks  are  passed  over  to  tbe  clerk  who 
enters  them  on  tbe  list,  they  undergo  inspection  by 
the  Paying  Teller,  as  already  described  in  tbe  duties 
of  his  desk. 

Tbe  Assistant  Teller  transfers  bis  services  to  the 
Deposit  Teller  about  twelve  o'clock,  and  is  his  aid  for 
the  remainder  of  tbe  day. 

An  accurate,  skillful,  and  faithful  clerk  in  this  place, 
is  sure  to  be  promoted.  The  officers  observe  bis 
habits  of  business,  and  regard  him  as  a  very  important 
aid  in  the  money  department.  He  is  frequently 
obliged  to  act  as  Deposit  Teller,  and  gradually 
acquires  all  the  tact  and  self-possession  necessary  to 
tbe  office.  He  is  tbe  acting  Third  Teller  also,  when 
that  clerk  is  absent,  and  succeeds  him  in  the  scale  of 
promotion. 

In  some  of  tbe  larger  banks,  the  examination  of  tbe 
Exchanges  from  the  Clearing  House,  is  kept  in  its 
details  entirely  separate  from  the  Paying  Teller's 
department.  A  book  of  printed  forms  like  the  follow- 
ing, is  used : 

11 


242 


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EXAMINING   THIS   EXCHANGES.  243 

By  this  method  the  Paying  Teller  has  nothing  to 
do  with  the  details,  excepting  in  examining  the 
checks  before  they  are  charged  on  the  ledgers.  He 
adopts  the  total,  $907,658.02,  as  a  receipt,  and  the 
amount  of  checks,  $873,206.43,  as  a  voucher  for  that 
portion  of  it.  The  bank  bills,  $10,210,  are  incorpo- 
rated with  his  cash,  and  the  foreign  bills  are  sealed 
up  and  charged  by  memorandum  checks  to  the 
issuing  banks.  The  irregularities  of  the  returned 
checks  are  corrected  as  far  as  possible  and  sent  back 
in  a  subsequent  exchange. 


244  THi:   CHECK   CLERK. 


CHAPTEE    Xn. 

THE        CHECK        C  L  E  K  K, 

It  is  the  duty  of  tlie  Check  Clerk  to  make  out  a 
separate  list  of  the  checks,  paid  by  each  Teller,  to 
enable  him  to  make  his  Cash  proof.  For  this  purpose 
they  are  assorted  alphabetically,  and  their  amounts 
only,  transcribed  and  added  together. 

Then,  as  each  Teller  has  checks  to  be  charged  in  all 
the  Ledgers,  they  must  be  transcribed  in  the  list  of 
each  Ledger,  for  the  postings  and  proof  of  each.  This 
is  a  full  record,  embracing  the  name  of  the  drawer  as 
well  as  the  amount.  It  is  from  these  lists,  that  the 
checks  are  posted  to  the  Ledgers,  and  they  are  there- 
fore called,  also.  Debit  Cash  Books. 

The  agreement  of  the  footings  in  this  different 
division  of  the  checks,  proves  the  work  to  be  correct. 

The  Exchange  Checks,  belonging  to  the  Paying 
Teller's  cash,  are  the  first  copied  into  the  Debit  Cash 
Books,  and  they  are  added  up  before  any  others  are 
entered.  Tliesc  several  footings  must  correspond  with 
the  amount  of  checks  in  the  original  list,  made  up  for 
the  Assistant  Teller. 

It  is  indispensable  that  the  Check  Clerk  should  be 
an  accurate  and  rapid  copyist,  and  quick  at  addition. 
This  is  the  most  of  what  he  has  to  do.  But  he  acts 
as  a  general  assistant,  -when  not  occupied  with  his  spe- 


CHANCES   OF   TKOMOTION.  245 

cilic  duties.  This  is  a  course  of  preparation  for  the 
higher  desks  which  he  is  unwise  to  neglect ;  for  if 
well  qualified,  his  chances  of  promotion  are  better 
than  if  he  were  nearer  the  top  of  the  scale.  The 
retirement  of  any  one  of  the  ten  or  twelve  clerks 
above  him  will  be  sure  to  advance  him  ;  whereas,  the 
Note  Teller,  for  example,  has  but  two  chances  before 
him,  and  the  Deposit  Teller  but  one. 

The  Check  Clerk  is  generally  a  young  man,  receiv- 
ing a  salary  of  from  five  to  eight  hundred  dollars. 

Many  of  the  higher  Clerks  and  Tellers,  and  not  a 
few  of  the  Cashiers  of  our  city  banks  began  their 
career  as  Check  Clerks.  They  have  advanced  step 
by  step,  according  to  their  merits,  and  are  among 
those  who  possess  the  best  practical  knowledge  of  the 
banking  business. 


24:6  THE   RUNNEK. 


CHAPTER  Xin. 

THE   RUNNEK. 

The  Runner  is  so  called,  because  he  does  the  run- 
ning of  the  bank,  to  serve  notices,  collect  drafts,  and 
so  forth.  He  is  the  bank's  cornier — its  local  mail ;  and 
for  the  note-paying  part  of  the  community,  its  ser- 
geant-at-arms. 

His  distinctive  office  is,  to  prepare  and  deliver  notices 
of  all  payments  due  at  the  bank  counter.  The  usual 
form  of  the  notice  is  placed  at  the  end  of  this  chap- 
ter— the  italicized  portion  being  that  which  he  fills  up 
with  his  pen. 

The  duties  of  the  Runner  are  not  the  same  in  all 
the  banks.  In  those  of  very  extensive  and  active 
business,  he  has  enough  to  do  to  keep  up  the  delivery 
of  his  notices,  which  may  average  from  two  to  three 
hundred  for  every  day  in  the  year.  In  some  of 
the  smaller  institutions,  he  "  ticklerizes "  the  notes 
from  the  Collection  Register,  or  acts  as  an  assistant 
to  the  Tellers,  In  most  of  the  banks,  the  collection 
of  the  sight  drafts  which  are  received  by  the  morning 
mail  is  an  important  part  of  his  service. 

The  preparation  of  the  bank  notices  is  a  work  of 
considerable  labor.  They  are  printed  in  sheets,  all 
on  the  same  sheet  with  the  title  of  the  same  month. 
The  Runner  takes  a  sheet  for  May,  and  from  the 


THE   KUNNER   GIVING   CREDIT.  247 

Tickler  fills  up  the  blanks  with  the  name  of  the  payer, 
and  the  amount,  of  all  notes  due  on  the  first  day  of  the 
month ;  and  so  with  each  subsequent  date.  They 
are  then  cut  apart,  and  arranged  alphabetically.  By 
the  aid  of  the  directory,  he  marks  on  each  the  resi- 
dence of  the  payer.  He  then  assorts  them  by  streets, 
for  the  most  convenient  route  of  service.  After  long 
practice,  his  memory  becomes  itself  a  directory  of 
names  and  places,  and  saves  him  much  writing  and 
trouble  of  reference. 

Having  arranged  his  notices  for  the  delivery  of  the 
day,  the  Runner  stands  ready  to  receive  the  drafts, 
of  which  there  may  be  from  twenty  to  fifty,  to  be 
collected  at  various  points  through  the  city.  These 
are  briefly  copied  in  his  Memorandum  Book,  and  he 
sets  out  on  his  tour.  He  returns  their  proceeds  in 
the  course  of  the  day  to  the  Note  Teller,  who  tests 
their  accuracy  by  comparison  with  his  own  record. 
In  an  active  market,  the  amount  of  the  sight-drafts 
collected  in  a  single  day  often  exceeds  one  hundred 
thousand  dollars.  It  is  very  necessary  that  a  bank 
Kunner  should  possess  good  judgment  and  knowledge 
of  men ;  for  he  is  measurably  trusted  with  the  power 
of  credit.  The  drafts  are  commonly  paid  by  checks, 
which,  in  his  discretion,  he  takes  without  being  certi- 
fied. But  he  has  often  to  deal  with  strangers  and 
new  firms,  when  he  insists  on  certification,  or  on  bank 
bills.  If  any  refuse  to  pay  in  satisfactory  funds,  he 
returns  the  draft  to  the  Note  Teller,  where  it  remains 
till  three  o'clock,  and  then,  if  still  unpaid,  it  is  given 
to  the  Notary  for  protest. 

The  Kunner  experiences  more  difficulty  when  the 


248  THE   KUNNEK. 

market  is  growing  stringent  than  at  other  times.  He 
withdraws  his  credit,  and  alleging  the  instruction  of 
the  bank  othcers,  declines  to  take  uncertified  checks. 
The  payers  generally  acquiesce  in  the  propriety  of 
the  rule,  though  not  always  with  good  grace.  Occa- 
sionally one  refuses  to  pay  except  by  his  check,  as 
usual,  which  the  Runner  will  not  receive.  The  draft 
is  handed  over  to  the  Notary,  by  whom  it  is  either 
collected  or  protested,  at  a  later  hour  in  the  day. 

The  Runner  has  many  short-time  drafts,  payable 
after  date,  or  sight,  which,  if  not  immediately  ac- 
cepted, are  left  with  the  drawee,  who  agrees  to  return 
them  to  the  bank.  If  declined,  they  are  protested 
for  non-acceptance,  and  again  for  non-];)ayment  at  the 
due  date.  Sight  drafts  must  be  accepted  or  protested 
under  the  date  of  presentation,  for  that  is  the  date  on 
which  they  are  Jir^st  seen,  by  the  drawee.  It  is  legal 
"  sight,''^  if  the  presentation  is  made  at  the  store  or 
domicil  of  a  man,  though  he  may  be  absent  from  both ; 
otherwise,  a  messenger  or  notary  might  pursue  the 
drawee  for  a  week  or  a  month,  without  effecting  a 
proper  demand.  If  the  Runner  is  not  satisfied  to 
trust  a  draft  with  the  drawee,  as  above  stated,  he 
informs  him  that  he  can  call  at  the  bank  in  the  course 
of  that  or  the  following  day,  and  accej)t  it.  One  day 
is  allowed,  by  custom,  for  examination  of  the  account 
on  which  it  is  drawn. 

In  the  distribution  of  notices,  the  Runner  has  the 
advantage  of  not  being  confined  to  particular  hours. 
He  can  serve  them  while  enjoying  an  evening  ramble, 
and  he  can  walk  in  no  direction  that  does  not  give 
him  the  opportunity  of  dropping  some  by  the  way. 


The  Runner  at  a  Loss. 


SERVING   NOTICES.  249 

His  pockets  are  always  full  of  them.  Every  shop, 
trade,  sign,  and  finally,  every  man,  seems  to  his  ima- 
gination to  invite  a  bank  notice.  A  very  intelligent 
Runner  once  stated  to  the  author,  that  he  seldom  met 
an  acquaintance  or  friend,  without  being  annoyed  by 
an  involuntary  feeling  that  his  first  duty  was  to  serve 
him  with  a  bank  notice. 

Frequent  complaints  are  made  at  the  'Note  Teller's 
desk  that  the  payer  received  no  notice.  Mr.  Spitfire 
flies  into  a  passion,  and  wants  to  know  "  what  in  the 
devil  a  Runner  is  good  for  if  he  can't  find  where  people 
live,  even  if  their  names  are  not  in  the  directory !" 
Mr.  Short  takes  some  satisfaction  in  abusing  the 
Runner  for  not  sending  him  a  notice,  although  there 
might  be  a  better  reason  for  his  not  paying  j)romptly. 
Mr.  St.  Yitus  asks  "why  that  notice  was  sent  to  him? 
He  didn't  owe  it,  and  wouldn't  pay  it,  and  considered 
it  an  insult  to  have  other  people's  debts  poked  in  his 
face." 

The  Runner  sometimes  attempts  an  explanation. 
He  cannot  follow  all  the  removals,  nor  be  advised  of 
the  new-comers  in  a  large  city.  Changes  of  residence 
take  place  from  many  causes :  the  pulling  down  of  old 
stores  to  rebuild ;  the  destruction  of  property  by  fire ; 
the  dissolution  of  old  partnerships,  and  the  formation 
of  new  firms.  Death  takes  names  out  of  the  Direc- 
tory, though  he  does  not  always  foil  the  Runner ;  for 
law  says  that  a  man  shall  not  die  until  his  notes  are 
paid. 

The  Runner  is  embarrassed  also  by  the  repetition 
of  names.  He  may  be  excused  for  serving  a  notice 
on  the  wrong  John  in  some  families,  especially  among 

11* 


250  THE   RUNNER. 

the  Smiths  and  Browns.  These  gentlemen,  if  they 
are  anxious  to  pay  their  notes,  write  their  residence 
as  a  part  of  the  signature.  Again,  the  number  of  a 
store  is  changed  or  defaced  by  accident  or  design. 
There  are  some  people  who  prefer  retirement  to  pub- 
licity, and  refuse  their  names  to  the  canvasser.  Bank- 
ruptcy drives  men  from  the  great  thoroughfares  into 
alleys  and  attics.  "  The  Panic"  tears  down  gilt  block- 
letters  from  plate-glass  fronts,  and  sends  the  Runner 
to  look  after  their  old  owners  in  upper  stories,  behind 
a  strip  of  tin  with  characters  in  white  paint.  One  or 
other  of  these  accidents  explains  most  of  his  omissions. 

The  Runner  picks  up  a  good  deal  of  information 
in  his  jostling  intercourse  with  men,  and  the  bank 
officers  are  not  above  asking  him  for  the  results  of 
his  observation.  He  hears  the  gossip  of  loungers  in 
stores  and  along  the  streets.  If  a  great  house  is  shak- 
ing in  the  wind,  he  is  told  of  it.  He  inquires  what 
other  great  houses  are  likely  to  be  implicated,  or  how 
many  smaller  are  to  be  drawn  into  the  vortex.  He 
is  regarded  as  an  official  confidential  person,  familiar 
with  financial  secrets,  always  answering  less  than  he 
knows,  and  therefore  subject  to  many  questions. 
When  any  extraordinary  excitement  prevails,  he 
seldom  returns  from  his  daily  tour  without  a  consider- 
able budget  of  news. 

"Well,  Mr.  Foote,  what  do  you  hear  to-day?" — 
asks  the  President  or  Cashier. 

"  Things  look  pretty  black,  sir.  Bigg  &  Co.  have 
failed!" 

"What!     Bigg  &  Co?' 

"  Yes,  sir.    That's  the  talk  of  the  street." 


GIVING    NEWS.  251 

"  Anything  more  ?" 

"Yes,  sir.  Trouble  among  the  flour  men.  Sweatem, 
Sore  &  Go's  paper  is  offered  at  three  per  cent  a 
month." 

"  You  don't  say  so !" 

"It's  a  fact,  sir  ;  and  no  buyers  even  at  that." 

"What  else?" 

"  I  heard  a  good  many  rumors,  but  only  two  names 
mentioned,  besides  Bigg  and  Sweatem.  —  Hawk  & 
Hawkins,  and  Blue  &  Co.  There's  a  rumor  about  a 
large  shipping-house  on  South  Street,  but  nothing 
definite.     Sort  of  apprehension  all  round." 

"  Mr.  Foote,  didn't  I  hear  you  say  something  about 
Sturgeon,  the  oil-man,  the  other  day?" 

"  Yes,  sir.  I  took  a  sight  draft  there,  and  he  got 
mad,  because  I  refused  his  check  without  being  certi- 
fied. I  took  his  check  once  before,  and  they  refused 
to  certify  it  at  bank  until  his  deposit  was  made." 

The  Cashier  returns  to  the  Directors'  room  with  this 
information. 

Like  every  other  clerk,  the  Eunner  is  sometimes 
called  in  as  talesman,  to  make  up  a  short  jury  in  com- 
mercial trials. 


CORNER   OF   GREENWICH    AND  WARREN  STREETS. 

Your  Note  for  ^S.^yO.-^^O        Dollars, 

is  payable        <^/>/      AUGUST. 


252  THE    rOBTER. 


CHAPTER  XIV. 

THE   POBTEE. 

The  Porter  of  a  bank,  though  at  the  lower  end  of 
the  line,  is  by  no  means  least  among  its  servants.  The 
authority  of  the  President  is  exerted  from  the  head 
to  the  foot — that  of  the  Porter  runs  from  the  foot 
towards  the  head ;  and  in  this  direction  it  bears  con- 
siderable analogy  to  that  of  his  great  coadjutor. 

His  situation  is  one  of  high  responsibility  and  trust. 
Like  his  associates  he  gives  bonds — generally  to  the 
amount  of  five  or  ten  thousand  dollars. 

The  key  of  the  outer  door  of  the  building  is  placed 
in  his  custody.  Consequently,  he  must  be  at  the  bank 
first  in  the  morning,  and  last  at  night.  In  some 
instances,  he  takes  charge  also  of  the  key  of  the  book- 
vault,  that  the  clerks  may  have  as  early  and  as  late 
access  to  the  account-books  as  they  desire. 

It  must  be  an  extraordinary  and  well-authenticated 
order,  that  would  induce  one  of  the  Kew  York  City 
Bank  Porters  to  open  the  doors  of  the  building,  or  to 
surrender  the  key  for  a  moment,  to  clerk  or  oflicer, 
during  the  night-hours,  or  on  Sunday.  Yet  he  might 
visit  it  in  person,  alone,  without  other  authority  than 
his  right  of  ofiice  ;  it  is  his  duty  to  do  so,  and  to  search 
the  premises,  if  he  has  any  suspicion  of  danger  from 
burglars,  fire,  or  other  cause.     Some  porters  make  it 


GENERAL    DUTIES.  253 

a  rule  to  visit  the  bank  once  at  least  on  every  holi- 
day. 

The  modern  plan  of  bank  building  includes  under 
the  same  roof  other  apartments  for  hire ;  and  a  Janitor 
is  employed  to  take  charge  of  the  property,  which 
makes  the  Porter's  watch  less  necessary. 

The  first  work  of  the  Porter  in  the  morning  is,  to 
open  the  bank,  and  to  prepare  it  for  the  comfortable 
possession  of  the  officers  and  clerks.  He  unlocks  the 
book-vault,  and  carries  the  various  account-books  to 
their  respective  desks.  As  soon  as  any  of  the  clerks 
arrive  to  relieve  his  watch,  he  goes  to  the  Post-office 
for  the  letters.  He  is  the  only  accredited  messenger 
to  whom  they  would  be  delivered  without  a  special 
order.  Any  other  would  be  required,  also,  to  give 
proof  of  his  identity. 

The  Porter  is  regarded  as  a  general  assistant  to  the 
clerks ;  but  his  principal  duties  are  closely  connected 
with  the  department  of  the  Pa^dng  Teller.  He  counts 
all  the  gold  that  is  received,  and  ties  it  up  in  bags, 
with  the  bank  seal,  and  a  label  of  the  amount  affixed, 
ready  to  be  paid  out  in  quantity  on  demand.  This  is 
done  immediately  under  the  eye  of  the  Teller ;  and 
the  bags  are  then  carried  into  the  vault.  The  Porter 
keeps  a  record,  so  that  he  can  tell,  at  any  moment,  the 
number  of  bags  on  hand,  the  denomination  of  the 
coin,  and  the  total  amount. 

If  two  hundred  thousand  dollars  of  specie  is  needed 
to  pay  a  balance  due  to  the  Clearing  House,  the  Pay- 
ing Teller  goes  into  the  vault,  and  designates  the  bags 
which  are  to  be  carried  out ;  or  if  pressed  with  other 
duties,  he  intrusts  this  service  to  the  Porter,  being 


264:  THE   PORTER. 

careful  to  count  the  bags  before  they  are  taken  from 
the  bank. 

Every  bag  is  labelled  with  the  name  of  the  sealing 
bank.  Claims  for  deficiency  by  miscount,  abrasion, 
or  counterfeit  pieces,  must  be  made  "  within  a  reason- 
able time,"  or  they  lose  their  validity.  The  rule  of 
every  well-regulated  bank  is,  to  count  or  weigh  all 
coin  as  soon  as  possible  after  receiving  it,  even  if  it 
should  be  a  return  of  its  own  bags  with  unbroken 
seals.  The  two  hundred  thousand  dollars  paid  by  the 
Metropolitan  Bank  at  the  Clearing  House  may  be 
distributed  among  ten  other  banks,  each  of  which 
counts  its  portion,  affixes  its  own  seals  and  labels,  and 
holds  it  ready  to  be  paid  back  through  the  same 
channel.  The  following  day  may  bring  some  of  the 
same  bags  again  to  the  Metropolitan,  where  it  is  again 
counted,  and  sealed  as  before. 

Gold  suifers  abrasion  by  long  use.  It  is  first 
counted  by  hand,  and  the  pieces  slip  on  each  other. 
It  is  then  taken  up  in  iron  scoops  and  poured  into 
bags.  These  are  handled  roughly  in  carriage  from 
place  to  place,  and  thrown  heavily  from  the  counter 
to  the  floor.  As  often  as  the  bags  are  opened  for 
counting,  the  contents  are  turned  out  in  bulk,  and  the 
uneven  surfaces  grind  against  each  other.  It  is  fre- 
quently poured  into  metallic  scales  to  be  tested  by 
weight,  or  spread  out  on  a  table  for  inspection  to 
detect  false  pieces.  It  undergoes  no  trifling  friction 
in  the  pocket  against  other  coin.  Although  this  does 
not  for  a  long  time  sensibly  afiect  the  value  of  the 
pieces  separately,  it  is  very  perceptible  when  a  thou- 
sand of  them  are  taken  together,  especially  of  the 


DETECTING   BAD   COIN.  255 

smaller  denominations.  It  is  rarely  that  a  bag  of  live 
thousand  dollars  by  count,  of  what  is  in  current  use, 
of  the  quarter-eagles  and  of  the  one-dollar  pieces, 
holds  out  full  value  in  weight.  The  deficiency  on 
that  sum  is  very  commonly  from  seven  to  ten  dollars. 
The  ten  and  twenty  dollar  pieces  of  our  oldest  coinage 
are  not  yet  sensibly  reduced  from  this  cause.  The 
fraudulent  process  of  "sweating"  consists  in  putting 
the  coin  into  revolving  cylinders  with  sand,  after  the 
manner  of  polishing  steel  pens,  by  which  it  is  worn 
away  evenly  and  imperceptibly.  It  is  also  reduced 
by  filing,  and  by  having  small  holes  drilled  through 
it,  which  are  concealed  by  hammering.  The  one- 
dollar  pieces  are  sometimes  cut  in  two  with  a  saw, 
and  the  parts  are  then  ingeniously  joined  together. 
This  last  device  may  be  detected  by  an  irregularity 
in  the  "  milling,"  or  little  cross  furrows  on  the  edge. 

The  Porter  is  watchful  against  these  various  pro- 
cesses, and  rejects  every  piece  that  is  impaired  by 
them.  It  seldom  happens  that  they  are  brought  to 
the  bank  for  deposit  in  any  quantity,  but  they  slip  in 
singly.  When  but  slightly  injured,  they  are  received 
and  paid,  over  the  counter,  but  are  kept  out  of  the 
bags  put  up  for  the  Clearing  House.  If  they  collect 
in  considerable  amount,  they  are  sold  by  weight  to 
the  jewellers,  or  sent  to  the  mint  for  recoinage. 

The  Porter  acquires  a  very  delicate  skill  in  the 
detection  of  false  or  light  coin.  Peculiarities  of  color 
attract  his  eye  as  it  wanders  over  the  table  where  the 
pieces  are  spread  out,  or  as  they  slide  in  bulk  from  the 
bags.  He  weighs  even  the  lighter  coin  with  almost 
unfailing  accuracy,  on  the  end  of  his  finger.     Both 


256  THE   PORTEK. 

by  touch  and  smell  he  can  distinguish  the  genuine 
from  the  base,  of  silver  or  gold — and  also  by  the  sense 
of  hearing,  as  he  twirls  the  piece  in  the  air,  or  throws 
it  upon  the  counter  to  catch  its  "  ring." 

Foreign  gold  is  not  current  in  the  bank  settlements. 
What  is  offered  on  deposit,  is  received  at  a  fixed  rate, 
a  trifle  below  its  value ;  and  when  it  accumulates,  it 
is  sold  to  the  brokers  at  a  small  profit. 

A  very  large  amount  of  foreign  gold  is  brought  into 
the  United  States  by  emigrants  and  travellers  from 
Europe.  It  is  mostly  taken  to  the  "West,  either  to 
buy  land  or  to  be  kept  for  emergencies.  Gradually 
it  finds  its  way  into  the  shops,  and  thence  either  to 
the  banks  or  private  exchange  dealers,  who  ship  it  to 
their  correspondents  in  New  York.  It  is  quite  usual 
for  our  city  banks  to  receive  from  some  thriving  town 
beyond  the  Mississippi  River  a  well-ironed  box  of  fifty 
pounds'  weight,  filled  with  an  indiscriminate  mixture 
of  half  the  coinages  of  Europe,  to  the  value  of  nearly 
ten  thousand  dollars.  The  Porter  assorts  the  pieces 
with  the  interest  of  a  connoisseur  in  numismatology ; 
and  after  making  a  complete  invoice,  sells  them  to  a 
specie  broker,  by  whom  they  are  again  sold  for  ship- 
ment, generally  to  France  or  England. 

The  amount  of  coin  counted  daily  by  the  Porter 
depends  on  the  activity  of  the  market.  It  has  been 
much  reduced  by  the  adoption  of  specie  certificates 
for  the  Clearing  House  settlements  ;  but  still  reaches, 
occasionally,  perhaps  two  hundred  thousand  dollars, 
from  which  it  varies  to  the  one-tenth  part  of  that 
sum.  Large  amounts  are  frequently  drawn  from 
Philadelphia  and  Boston  to  pay  balances ;  and  lesser 


THE  poetek's  pouch.  257 

remittances  flow  in  from  other  places.  A  Porter  in 
one  of  our  active  city  banks  counts,  in  the  course  of 
a  year,  from  twenty  to  twenty-five  millions  of  dollars. 

The  time  occupied  in  counting  depends  on  the 
denomination  of  the  coin.  Twenty  bags,  or  one  hun- 
dred thousand  dollars  in  "Washingtons  (twenty-dollar 
pieces)  may  be  counted  within  one  hour.  The  ten- 
dollar  pieces  require  near  double  the  time,  and  the 
smaller  coin  still  more  in  proportion.  The  one-dollar 
]3ieces  are  put  up  for  counter  use  in  rolls  of  one  hun- 
dred dollars  each. 

Silver  is  not  used  in  the  bank  settlements.  The 
immense  supply  of  gold  from  California  and  Australia 
has  superseded  it  in  the  general  exchanges  of  com- 
merce. As  it  is  not  legal  tender  for  sums  over  five 
dollars,  our  banks  decline  receiving  it  on  deposit  in 
large  quantity. 

It  is  impossible  for  the  Paying  Teller  to  satisfy 
himself,  by  personal  oversight,  of  the  accuracy  of  the 
Porter's  work  in  detail,  or  even  to  observe  him  always 
in  the  movement  of  large  amounts  of  coin ;  and  it 
follows,  that  there  is  a  divided  responsibility  between 
them.  This  is  provided  for  in  their  separate  relation 
to  the  bank.  If  the  Porter  should  abstract  any  gold, 
it  would  be  in  his  capacity  as  an  assistant ;  and  his 
bondsmen  would  be  liable.  The  various  expedients 
by  which  he  could  perpetrate  a  fraud  are  obvious 
enough ;  but  his  chances  of  carrying  it  over  from  day 
to  day,  without  detection,  are  very  narrow. 

When  the  Exchanges  are  fully  prepared  in  the 
morning,  the  Porter  packs  them  neatly  in  his  Pouch, 


268  THE   PORTEK. 

in  their  numerical  order,  and  sets  out  for  the  Clearing 
House,  which  he  reaches  a  few  minutes  before  ten 
o'clock.  By  half  past  ten,  he  is  back  with  the  return 
Exchanges. 

The  Porter's  Pouch  was  formerly  made  to  sling 
over  the  shoulder,  so  that  it  would  rest  within  the 
fold  of  the  left  arm,  leaving  the  right  at  liberty.  A 
chain  was  enclosed  within  the  strap,  to  foil  any 
attempt  that  might  be  made  to  cut  it.  Such  precau- 
tions were  regarded  as  necessary  when  a  large  pro- 
portion of  the  Exchanges  consisted  of  bank  bills — a 
single  Porter  often  carrying  more  than  fifty  thousand 
dollars.  Several  of  the  banks  were  in  the  habit  of 
sending  a  guard  with  the  Porter — and  in  one  or  two 
instances,  he  was  armed  with  a  loaded  pistol ;  but, 
happily,  no  case  occurred  requiring  its  use.  The 
route  of  the  Porter  was  then  very  long,  and  through 
many  crowded  streets.  There  has  been,  however,  as 
the  writer  is  informed,  but  a  solitary  instance  of  per- 
sonal attack  on  a  bank  messenger  within  the  last 
twenty  years,  and  that  was  unsuccessful. 

The  Porter  of  the  present  day  might  readily  be 
mistaken  for  a  traveller,  with  his  valise  or  carpet-bag 
in  hand ;  but,  more  likely  still,  he  may  pass  along  on 
foot,  or  in  the  omnibus,  without  attracting  other  than 
casual  notice. 

The  Porter's  Table,  with  the  scales  for  weighing 
gold,  stands  within  the  enclosure  of  the  desks,  near 
the  Paying  Teller  ;  and  when  not  occupied  with  out- 
door duties,  he  sits  there  awaiting  orders.  In  a  busy 
season,  these  are  not  long  coming.  The  Paying 
Teller   requests  him  to  make  up   a   tray   of    gold 


THE  porter's  troubles.  259 

pieces — that  is,  to  count  them  into  piles  of  fifty, 
twenty,  or  ten  each,  as  may  be  required ;  and,  also, 
to  prepare  several  trays  of  silver  coin — the  half-dol- 
lars and  the  quarters,  in  piles  of  twenty  ;  the  dimes, 
commonly  in  paper  rolls  of  two  dollars  each  ;  and  the 
half-dimes,  in  rolls  of  one  dollar,  with  a  quantity  open 
for  convenient  use.  This  is  hardly  done,  before  one 
of  the  Book-keepers  asks  him  to  "  step  down  to  Jones 
&  Brass,  and  get  their  bank-book.  Those  fellows 
have  got  credit  for  a  note  that  belongs  to  another 
dealer,  and  they've  drawn  against  it." 

The  Dej)osit  Teller  requests  him,  at  the  same  time, 
to  "  get  that  check  of  Peter  Johnson's  indorsed  by 
Powell  &  Company." 

The  Cashier  inquires  where  Donaldson  has  gone ! 
"  It  is  very  singular,"  he  says,  "  that  he  is  so  apt 
to  be  out  of  the  way,  just  when  I  most  want  him ! 
Mr.  Crook,  send  liim  to  me  as  soon  as  he  comes  back — 
will  you  ?" 

"  Yes,  sir." 

Donaldson  reports  himself  to  the  Cashier,  and 
returns  from  another  errand  just  in  time  to  get  fifty 
thousand  dollars  out  of  the  vault  in  exchange  for  that 
amount  of  specie  certificates,  to  accommodate  a  neigh- 
boring bank ;  and,  also,  to  take  part  in  an  altercation 
between  the  Eeceiving  Teller  and  a  dealer's  clerk,  on 
a  claim  for  ten  dollars  deficiency  in  a  bag  of  mixed 
coin,  which  the  latter  had  deposited  the  day  before. 
The  clerk  is  swearing  that  he  counted  it  himself,  and 
knows  that  it  was  correct ;  and  the  Teller  maintains, 
with  equal  obstinacy,  that  the  bank  is  right.     The 


260  THE   POKTEK. 

Porter  affirms  that  he  "  counted  it  three  times  over, 
and  could  not  be  mistaken."  Such  differences  cannot 
always  be  adjusted  to  mutual  satisfaction.  They 
sometimes  give  rise  to  petty  quarrels,  and  to  suspi- 
cions of  dishonesty  between  the  disputants ;  but 
dealers  generally  admit  that  the  Porter  is  the  more 
likely  to  be  correct ;  and  there  is  little  room  for 
doubt,  if  the  accuracy  of  his  reckoning  is  confirmed 
by  the  proof  of  the  Teller's  cash  at  the  close  of  the 
day.  Occasionally,  Mr.  Donaldson  is  gratifi.ed  by  an 
acknowledgment  from  the  depositor  : 

"  Tou  were  right  in  your  count  of  that  specie.  We 
discovered  the  error  in  our  own  books." 

He  is  seldom  wrong.  Old  customers,  who  know 
how  careful  he  is,  what  various  tests  he  employs,  and 
how  he  values  his  reputation  for  accuracy,  very  com- 
monly prefer  his  count  to  their  own.  They  do  not 
hesitate  to  take  from  him  bags  of  gold  without  exam- 
ination, and  pay  them  over  at  the  Custom  House  for 
duties. 

One  of  the  habitual  tests  of  correctness  in  counting 
is,  to  observe  that  the  tops  of  piles  containing  the 
same  number  of  pieces,  of  the  same  coinage,  are  on  an 
exact  level.  Each  piece  being  precisely  of  the  same 
thickness,  one  more  or  less  in  any  pile  is  seen  at  a 
glance.  The  application  of  a  straight-edge  to  pieces 
as  thin  even  as  the  quarter  eagle  or  the  silver  dime, 
is  an  almost  infallible  test.  The  Porter  has  also  the 
test  of  agreement  wdth  the  jjrevious  count  by  another 
person ;  and  finally,  that  of  weight,  in  scales  which 
sensibly  show  the  difl'erence  of  a  single  grain. 


MESSAGES   TO   OTHEK   BANKS.  261 

The  Kote  Teller  seizes  the  first  favorable  moment. 


towards  the  middle  of  the  day,  to  dispatch  the  Porter 
with  notes  for  certification.  There  may  be  thirty, 
fifty,  or  a  hundi'ed  of  these,  payable  at  twenty  difii'er- 
ent  banks ;  and  at  each  he  is  obliged  to  fall  in  at  the 
tail  of  the  column  that  waits  at  the  Paying  Teller's 
counter.  This  column  is  always  longer  and  slower  in 
its  movements  when  business  is  most  hurried,  and 
consequently  when  the  Porter's  minutes  are  most 
precious.  If  he  does  not  at  the  same  time  present 
the  overdrafts  and  informal  checks  which  have  been 
received  through  the  Exchanges,  he  must  make  a 
second  journey  for  that  purpose ;  and  a  third  to  col- 
lect from  the  dealers  of  his  own  bank  the  amount  of 
checks  returned  from  their  deposits  for  similar  defects. 
Within  the  half  hour  after  one  o'clock,  he  must  be  at 
the  Clearing  house  with  coin  or  specie  certificates  to 
liquidate  the  debit  to  the  other  banks ;  or  during  the 
subsequent  half  hour,  to  receive  his  credit  balance. 
He  is  expected  to  know  the  earliest  moment  at  which 
the  Southern  mail  ariives,  and  to  get  the  letters.  The 
delivery  of  letters  by  a  foreign  steamer  may  be  going 
on  at  the  same  time,  and  he  is  subject  to  the  delay 
of  waiting  his  turn  in  a  long  row  of  applicants.  He 
is  the  Cashier's  authority  for  the  hours  at  which  the 
departing  mails  close,  and  for  all  changes  of  rule  in 
the  Post-office  which  may  afifect  the  convenience  of 
the  bank. 

In  his  various  walks  and  contacts,  the  Porter  gains 
much  knowledge  of  men  and  things,  which,  discretion- 
ally,  or  in  answer  to  questions,  he  communicates  to 
the  bank  officers  between  whom  and  himself  there  is 


262  THE   POETEK. 

free  and  often  confidential  intercourse.  "  What  news 
at  tlie  Clearing  House  to-day,  Mr.  Donaldson?"  asks 
the  President. 

"  I  didn't  hear  any  thing  particular,  sir.  It  looks 
as  if  things  might  be  a  little  excited  and  uncomfort- 
able, that's  all." 

"  Ah !  "Well,  that's  a  good  deal.  What  makes  yon 
think  so  ?" 

"  A  little  sort  of  snajp^  sir.  Some  of  the  Porters 
came  in  late,  as  if  they'd  been  holding  back  for  morn- 
ing checks." 

"  Did  you  hear  any  thing  in  the  street  ?" 

"  I  heard  some  talk  about  a  failure  among  the 
brokers,  but  no  name," 

"  No  steamer  in  ?" 

"  Well,  yes,  sir ;  but  the  boys  ain't  crying  an  extra 
yet.  They've  got  a  notice  on  the  bulletins — '  Delhi 
not  taken  P  " 

The  President  catches  a  valuable  hint  from  many 
a  conversation,  of  which  this  is  an  example. 

"  Delhi  not  taken  !  Tlien,  Mr.  Cashier,  I  think  you 
may  answer  Mr.  Borrow  that  we  can't  give  him  any 
privilege  of  overdraft,  nor  re-discount  his  paper. 
These  country  banks  must  learn  to  take  care  of  them- 
selves." 

An  application  for  a  credit  of  fifty  thousand  dollars, 
which  had  been  lying  in  suspense,  is  thus  decided  by 
the  state  of  things  in  India. 

It  is  not  unlikely  that  the  Porter  will  carry  notices 
to  parties  witliin  the  next  half  hour,  calling  in  one  or 
two  hundred  thousand  dollars  of  demand  loans,  so 
sensitive  are  bank  officers  to  imaginaiy  effects  that 


ASSISTS    THK    PAYING   TELLEK.  263 

may  follow  an  announcement  that  some  "  Delhi "  or 
other  is  "  not  yet  taken." 

During  the  last  half  horn*  before  the  closing  of  the 
bank,  the  assistance  of  the  Porter  becomes  indispen- 
sable to  the  Paying  Teller.  He  must  replenish  the 
specie  trays  as  they  are  exhausted  of  their  contents. 
If  large  amounts  of  gold  not  coiTesponding  with  the 
prepared  bags  are  called  for,  he  counts  them  up  in 
separate  trays  to  the  Teller's  hand.  He  conveys 
checks  to  the  Book-keepers  to  see  if  they  are  good, 
before  certification.  The  great  brokers,  Nimble,  Rig 
&  Co.  have  already  obtained  advance  certifications 
to  the  amount  of  one  hundred  thousand  dollars,  and 
another  single  check  is  presented  for  seventy  thousand 
dollars.  The  Teller  is  unwilling  to  risk  certifying 
such  a  large  additional  amount  before  their  deposit  is 
made.  He  says  to  the  Porter  in  an  undertone :  "Ask 
the  Book-keeper  if  that  is  good  ?"  and  to  the  customer : 
"  I  will  answer  you  in  a  minute." 

The  clerk  of  Nimble,  Rig  &  Co.  has  just  joined  the 
string  of  depositors  outside  of  the  counter,  and  the 
holder  of  the  check  waits  for  his  certification  until  the 
Book-keeper  announces  that  their  account  is  good. 

At  three  o'clock,  the  Porter  carries  the  letters  to 
the  Post  Office.  He  then  counts  the  coin  in  the  trays 
of  the  Paying  Teller,  and  makes  an  exact  statement 
of  it.  He  renders  the  same  service  to  the  other  Tel- 
lers, if  required,  and  assists  them  in  the  carriage  of 
their  trunks  into  the  vault. 

The  Porter's  salary  ranges  from  seven  to  fifteen 
hundred  dollars  a  year.  He  enjoys  some  perquisites 
for  taking  charge  of  the  trunks  of  dealers  who  are  not 


264  THE   POUTER. 

willing  to  trust  their  valuable  papers  in  a  common 
office  safe. 

The  remaining  duties  of  the  day  consist  in  seeing 
that  the  ledgers  and  various  account-books  are  con- 
veyed into  the  book-vault,  and  that  the  banking-room 
is  thoroughly  swept  and  cleaned.  It  is  the  duty  of 
each  clerk  to  put  away  his  own  papers ;  but  the  Por- 
ter examines  the  fragments  that  are  scattered  about 
the  floor,  that  nothing  of  consequence  may  be  de- 
stroyed. His  last  care  is  to  look  into  all  the  corners 
and  closets,  and  under  the  counters,  to  see  that  no 
thief  has  made  a  lodgment  for  the  night.  Every  win- 
dow-bar and  bolt  undergoes  his  personal  inspection ; 
and  when  he  locks  the  outer  door,  and  puts  the  key 
in  his  pocket,  he  has  more  authority  over  the  build- 
ing than  any  other  person. 

"  Did  I  lock  that  door?"  It  is  not  surprising  that 
the  habit  of  twenty  years  has  taught  him  to  do  it  so 
mechanically,  that  he  cannot  always  remember  to 
have  heard  the  bolt  shoot  when  he  turned  the  key. 
To  verify  the  fact,  he  returns  to  try  the  fastenings, 
and  he  may  sleep  soundly  after  removing  the  last 
doubt  of  having  performed  his  last  duty. 

All  the  services  described  under  this  head  are  gen- 
erally considered  as  belonging  to  the  place  of  Porter. 
But  they  are  very  much  varied  in  difi'erent  institu- 
tions. For  instance,  in  some  of  the  larger  banks,  an 
extra  hand  is  employed  to  do  the  drudgery,  and  in 
some  of  the  smaller,  the  Porter  acts  as  Runner,  or  as 
assistant  to  the  Receiving  Teller.  He  is  often  com- 
petent to  discharge  the  duties  of  check-clerk  or  book- 
keeper ;  and  with  a  little  practice,  might  enter  some 
of  the  higher  clerkships. 


Matthias. 


THE   SPECIE   CLEEK.  265 

Many  of  the  principal  banks  in  New  York  have 
found  it  necessary,  from  the  great  increase  of  business, 
to  separate  the  higher  duties  of  the  Porter  from  the 
the  more  laborious,  and  to  institute  another  office,  to 
which  the  old  and  faithful  incumbent  has  fallen  heir, 
under  the  title  of  Specie  Cleric.  In  truth,  the  respon- 
sibility attached  to  the  counting  and  partial  custody 
of  the  coin,  the  daily  contact  with  confidential  afltairs, 
the  many  grave  services  rendered,  and  especially  the 
importance  of  an  intelligent  and  trustworthy  messen- 
ger to  attend  the  Clearing  House,  make  altogether  a 
charge  that  deserves  to  rank  with  the  higher  offices 
of  the  bank,  both  for  dignity  and  compensation. 
Where  the  office  remains  undivided,  the  Porter,  as 
well  as  the  Specie  Clerk,  is  practically  an  Assistant 
Teller ;  and  on  many  occasions,  he  has  a  larger  amount 
of  the  bank  funds  within  his  unsupervised  personal 
control  than  any  other  clerk.* 

The  Bank  Porters  of  the  City  of  Kew  York  have 
singularly  maintained  their  character  for  integrity 
and  fidelity.  But  a  solitary  instance  of  fraud  has 
occurred  amongst  them  in  twenty-five  years ;  and 
that  originated  in  the  bank  allowing  one  of  its  most 
important  rules  to  be  disregarded.  The  defaulter 
was  conducting  a  mercantile  business  with  an  exten- 
sive correspondence,  and  numerous  agents  through  the 
country,  while  at  the  same  time  he  was  intrusted 
with  an  unusual  custody  of  the  specie  vault.  The  sum 
abstracted  was  small,  and  repaid  by  his  bondsmen. 

*  In  some  instances,  thff  specie  vault  has  been  taken  from  the  custody  of  the 
Paying  Teller,  and  given  to  the  Specie  Clerk,  who  alone  is  held  responsible  for  its 
contents.    He  makes  a  daily  report  of  its  condition  to  the  officers. 

12 


266  THE   PORTER. 

In  the  mean  time,  however,  Book-keepers,  Tellers, 
Cashiers,  Presidents,  and  Directors,  have  been  impli- 
cated in  the  dishonest  use  of  bank  funds,  by  which 
successive  dividends  have  been  lost  to  the  stock- 
holders, and  in  a  number  of  cases,  the  institutions  com- 
pletely wrecked.  They  have  not  been  able  to  resist  the 
example  and  the  rage  of  speculation,  which  at  certain 
periods  has  overrun  the  popular  mind,  and  for  a 
season  apparently  destroyed  the  sense  of  common 
honesty. 

It  is  no  credit  to  a  man  that  he  shall  abstain  from 
theft,  and  that  he  shall  fulfill  his  solemn  engagements 
— although  costly  services  of  plate  testify  that  such 
an  extent  of  virtue  is  highly  esteemed  by  some  very 
respectable  people ;  yet  there  is  positive  and  rare 
merit  in  a  persistent,  faithful  discharge  of  duty,  where 
the  desire  of  personal  gain,  the  strongest  and  most 
constant  that  possesses  the  human  mind,  is  tempted 
by  the  immediate  control  of  the  means  to  gratify  it. 
Contentment  with  a  moderate,  but  sure  income,  and 
resolutely  shutting  out  of  view  all  thoughts  of  "  grow- 
ing rich"  by  lucky  adventures,  has  been  the  safe- 
guard of  the  Bank  Porter  in  his  long  and  creditable 
career. 

"While  there  are  many  instances  of  the  Porter 
advancing  by  the  usual  steps  of  promotion  to  the 
higher  clerkships,  and  even  of  their  "jumping  over 
the  heads"  of  Book-keepers  into  the  place  of  Teller, 
there  are  more  of  their  remaining  stationary,  through 
a  continuous  term  of  years,  than  in  any  other  grade 
of  bank  clerks.  This  comes  from  no  want  of  natural 
.  ability,  but  partly  from  want  of  cultivation  in  early 


LONG   SERVICE.  267 

life,  especially  in  mercantile  practice ;  partly,  because 
their  ambition  is  satisfied  with  having  secured  a  more 
fortunate  service  than  the  majority  of  their  class,  and 
partly  from  a  true  appreciation  of  certain  advantages 
of  their  position  over  most  of  the  inferior  clerk- 
ships in  the  bank.  It  is  less  monotonous  in  its  rou- 
tine, and  it  imposes  less  personal  confinement.  It 
requires  more  character  than  the  employment  of  an 
ordinary  book-keeper.  It  is  more  in  contact  with 
the  general  history  and  the  extraordinary  excite- 
ments of  the  bank.  There  are  many  Book-keepers 
whom  the  ofiicers  would  reject  as  Porter;  but 
there  are  few  Porters  who  would  not  be  accepted 
as  Book-keepers,  so  far  as  substantial  character  goes. 
In  every  valuable  quality  that  constitutes  the  true 
man  of  business,  saving  the  mere  practice  as  clerk, 
and  the  cultivation  of  manner  that  makes  the  ac- 
complished officer,  the  experienced  Bank  Porter  of 
New  York  is  not  second  to  any  class  of  his  associates ; 
and  as  it  relates  to  knowledge  and  capacity,  it  is  not 
extravagant  to  say,  that  the  interests  of  the  stock- 
holders and  the  convenience  of  the  dealers,  of  a  pro- 
portion no  less  than  one-fifth  of  our  city  banks,  might 
be  improved  by  transposition  of  office  between  the 
Porter  and  the  President  or  Cashier. 

The  Porter  has  the  same  right  as  any  other  servant 
of  the  bank,  and  it  is  equally  his  duty  to  exert  an 
independent  watchfulness  over  its  interests.  It  would 
not  excuse  him  to  allege,  that  it  was  "  none  of  his 
business,"  if  he  should  become  acquainted  with  any 
abuse  of  trust  in  clerk  or  officer,  and  fail  to  report 
it — if  of  the  former,  to  the  President  or  Cashier  ;  and 


268  THE   rORTEK. 

if  of  either  of  these,  theu  to  the  other,  or  to  some 
proper  person  connected  with  the  institution.  A  case 
is  known  to  the  writer,  in  which  a  Porter,  of  his  own 
accord,  prevented  a  Cashier  entering  tlie  vault,  when 
he  suspected  the  honesty  of  his  purpose ;  and  his  con- 
duct was  warmly  approved  by  the  Board  of  Directors. 

The  Porter  has,  comparatively,  little  direct  inter- 
course with  the  dealers.  The  care  of  the  bank 
checks  is  commonly  assigned  to  him  ;  and  he  enjoys, 
in  some  cases,  a  small  perquisite  in  the  sale  of 
different  varieties  of  check-books,  which  are  fur- 
nished by  a  stationer.  He  comes  into  contact  with 
the  specie-shipping  houses — receiving  and  preparing 
large  amounts  for  disbursement.  What  is  known 
as  a  cross-grained  disposition,  is  frequently  con- 
nected with  diligent  habits  and  faithful  service.  It 
would  be  singular,  if  among  the  sixty  Porters  of 
our  city  banks,  most  of  whom  have  had  but  little 
chance  of  education  and  social  refinement,  there 
were  not  some  to  adopt  the  conceit,  and  to  imitate 
the  manners  of  their  superiors. 

Of  the  fifty-three  banks  now  in  existence  in  the 
city  of  New  York,  about  one-half  have  been  organ- 
ized since  1850.  Among  the  older,  there  have  been 
many  instances  of  Porters  holding  office  from  fifteen 
to  twenty-five  years  ;  and  several  have  "  died  in  the 
harness,"  after  faithful  service  for  a  longer  period. 

Mr.  Ja^ies  Corkery,  at  present  the  Specie  Clerk  of 
the  Union  Bank,  is  now  in  the  seventy-fourth  year  of 
his  age.  He  has  served  the  institution  as  Porter  for 
thirty  years,  outliving  three  Presidents,  two  Cashiers, 
and  several  successive  companies  of  clerks.     For  the 


'  Father  Cole.' 


THE   GOLD   SPECTACLES.  269 

last  twenty  years,  lie  has  been  the  Keceiving  Specie 
Clerk  of  the  New  York  Savings'  Institution  (now 
located  in  Bleecker  street),  attending  there  on  the 
afternoon  of  two  days  in  the  week,  in  addition  to  his 
regular  duties  at  the  Union  Bank.  The  specie  that 
he  has  counted  and  weighed  would  be  tedious  to 
measure  by  tons  or  ship-loads.  The  amount  of  money 
trusted  to  his  charge,  in  one  shape  or  another,  if  it 
could  be  brought  together,  would  exceed  the  entire 
wealth  of  New  York ;  and  of  all,  he  has  rendered  a 
true  account. 

The  frontispiece  to  the  volume  represents  him,  sur- 
rounded by  the  implements  of  his  office. 

"  Father  Cole  "  entered  the  service  of  the  Ocean 
Bank,  as  Porter,  when  that  institution  was  organized. 
He  was  already  past  the  prime  of  life  ;  but  retained 
his  full  intellectual  vigor,  and  apparently  a  good 
reserve  of  bodily  strength.  The  faithfulness  with 
which  he  performed  his  duty,  gained  for  him  a  high 
place  in  the  esteem  of  officers,  clerks,  and  dealers. 
He  possessed,  in  a  remarkable  degree,  the  qualities 
that  are  most  valuable  in  a  confidential  Porter.  But 
he  soon  had  to  contend  with  failing  sight.  This  mark 
of  age  was  not  acknowledged  by  the  old  man,  until 
the  clerks,  to  whom  it  was  apparent,  presented  him 
with  a  pair  of  gold  spectacles,  as  a  proof  of  the 
respect  and  affection  with  which  they  regarded  him. 
He  unwillingly  retired  from  the  service.  At  a  later 
period,  he  submitted  to  a  surgical  operation  for  cata- 
ract, which  was  only  partially  successful.  His  physi- 
cal strength  gradually  declined,  and  he  died  on  the 
8th  of  March,  1858,  in  the  74:th  year  of  his  age. 


270  PKESENTS. 


CHAPTER   XV. 


PEESENTS. 


The  strict  theory  of  banking  is,  "  an  eye  for  an  eye, 
and  a  tooth  for  a  tooth."  The  bank,  at  least,  gives  no 
favors.  If  the  note  offered  for  discount  is  not  safe,  it 
is  rejected.  If  securities  are  deficient,  they  must  be 
increased.  And  the  bank  lends  only  for  its  own 
interest.  It  may  be  obliged  to  discount  paper  for  an 
undeserving  dealer  who  keeps  no  balance  on  deposit ; 
but  that  is  to  save  a  rimning  debt,  and  the  motive  is 
still,  to  serve  the  bank,  and  not  to  gratify  the  dealer. 
K  ever  a  loan  is  gi*anted  as  a  favor,  it  is  dishonestly 
gi-anted.  The  officers,  even  with  a  full  Board  of 
Directors  acting  in  concert,  have  no  right  to  discount 
a  note  as  a  favor.  The  money  or  the  credit  which 
they  are  dispensing  is  not  their  own.  It  belongs  to 
the  stockholders,  and  they  are  ti'ustees  merely, 
appointed  to  invest  it.  "Whenever  they  have  departed 
from  this  rule,  it  has  been  a  violation  of  duty  and 
integi'ity  which  ought  justly  to  involve  personal 
responsibility,  if  the  debtor  should  fail. 

The  object  of  stating  the  case  so  fully  is,  to  show 
that  there  is  no  ground  for  the  supposition  by  mer- 
chants, that  bank  officers  confer  favors  when  they 
discount  paper  for  them  ;  or  if  there  is  such  ground, 
that  it  is  dishonest.     The  box  of  "  Black  Dragon,"  or 


PKESENTS.  271 

the  caddies  of  "the  veritable  tears  of  Confucius," 
which  Mr,  Fum  sent  to  the  President  or  Cashier  after 
the  discount  of  his  bills  receivable  last  week,  there- 
fore, had  better  been  bestowed  on  the  convales- 
cents at  a  hospital,  where  the  gift  would  be  a  thou- 
sand times  more  appreciated,  and  whence  it  would 
never  be  followed  by  repentance.  The  market  which 
cannot  be  conciliated  by  a  cup  of  tea,  will  get  into 
spells  of  tightness ;  and  if  Mr.  Fum's  balance  of  account 
is  less,  or  if  his  paper  is  not  quite  so  good  as  that  of 
Mr.  Smith,  who  never  made  the  officers  any  present, 
it  will  be  rejected,  as  it  should  be.  There  is  not  a 
market  in  the  world  where  a  merchant  is  less  likely 
to  get  two  for  one,  than  at  the  bank  counter. 

If  there  is  any  favor  between  the  dealer  and  the 
bank,  it  is  conferred  by  the  former,  and  by  direct 
solicitation  of  the  latter.  The  bank  seeks  deposits. 
It  is  dependent  on  depositors  for  its  ability  to  declare 
dividends.  The  measure  of  favor  that  it  receives  is 
partly  indicated  by  its  willingness  to  pay  interest  on 
balances,  where  it  is  demanded.  But  the  mass  of 
personal  depositors  do  not  ask  interest,  and  so  far  as 
they  receive  no  return  in  the  shape  of  loans,  they 
confer  on  the  bank  a  very  solid  favor,  from  which 
great  profit  is  realized.  Substantially,  deposits  are 
capital — a  discounting  basis,  not  subject  to  dividends, 
and  therein,  for  the  bank,  better  capital  than  its  own 
stock. 

Kothwithstanding  these  facts,  banks  are  commonly 
regarded,  with  respect  to  commerce,  as  the  holders  and 
granters  of  favor ;  and  hence  comes  the  habit  ot 
dealers  making  presents  in  return.     Mr.  Fum  sends 


272  PKESENTS. 

choice  tea ;  Mr.  Kaisin,  a  sample  of  new  wine  from 
Hungary ;  and  Mr.  Plumb,  a  barrel  of  fine  pippins. 
It  would  seem  ungracious  to  refuse  such,  gifts,  as  they 
need  not  draw  after  them  any  bad  consequences  to 
the  bank.  But  where  or  how  to  stop  when  once 
begun,  is  more  difiicult  than  to  resist  the  beginning ; 
and  the  influence  of  example  in  the  chief  officers  is 
not  lost  on  the  clerks,  who  may  withhold  conveniences, 
if  they  cannot  grant  favors.  The  notion  that  banks 
are  superior  to  commerce,  extends  to  their  minor 
employments.  A  bank  clerk  is  better  than  a  mer- 
chant's clerk.  He  is  treated  with  more  deference ; 
and  it  is  conceded  that  his  position  is  surrounded  with 
more  dignity.  In  addition  to  this,  he  holds  some 
powers  which,  rightly  or  not,  he  may  make  discretion- 
ary. The  Book-keeper  may  not  be  too  strict  in  report- 
ing occasional  overdrafts;  or,  what  is  very  natural 
he  may  be  so  impressed  with  the  generous  and  honor- 
able character  of  a  man  as  to  believe  him  incapable 
of  taking  advantage  of  his  relaxed  vigilance.  It  is, 
therefore,  desirable  to  conciliate  him,  and  this  is  done 
by  presents.  Such  is  the  circumstantial  origin  of  some 
of  the  worst  frauds  in  bank  history. 

The  author  vouches  for  the  authenticity  of  the  fol- 
lowing anecdotes.  Most  of  the  incidents  related  came 
under  his  personal  observation. 

A  Cashier  asked  a  Director  of  the  same  bank,  if  he 
could  advise  him  where  to  purchase  a  certain  descrip- 
tion of  tea.  The  latter  engaged  to  find  the  article. 
On  the  same  evening,  a  "  quarter-chest "  was  left  at 
the  Cashier's  house  without  a  bill,  and  the  matter  was 


PRESENTS.  273 

not  again  alluded  to.  The  director  was  subsequently- 
indebted  to  the  officer  for  some  favors,  which,  how- 
ever, did  not  keep  him  solvent. 

A  dealer  in  fancy  goods  asked  the  same  Cashier  for 
his  adress,  without  specifying  any  object.  On  going 
home,  the  latter  found  his  parlor  mantel  furnished 
with  some  elegant  ornaments. 

A  Bank  President  inquired  of  a  dealer  in  foreign 
porcelain,  where  he  could  best  get  an  English  dinner- 
set  at  a  cost  not  over  one  hundred  dollars.  The  latter 
answered  that  his  acquaintance  with  wholesale 
importers  would  enable  him  to  pm'chase  it  at  a  con- 
siderable discount,  and  he  did  so.  The  President 
never  asked  for  the  bill,  but  he  discounted  his  friend's 
paper  liberally  "  between  the  Boards." 

A  Bank  Officer  said  carelessly  to  a  jeweller,  after 
serving  him  with  a  loan : 

"  By  the  way — where  is  that  gold-headed  cane  that 
you  promised  me  ?" 

The  jeweller  smiled,  but  said  nothing.  In  a  week, 
the  cane  was  sent ;  and  when  the  donor  called  at  the 
bank  subsequently,  he  was  accosted  with  an  expres- 
sion of  great  surprise : 

"  Why,  Ml".  D.,  you  didn't  suppose  I  was  in  earnest 
the  other  day,  did  you  ?" 

Another  Officer  called  at  the  store  of  a  dry-goods 
merchant,  after  assisting  the  latter  to  a  liberal  dis- 
count of  paper.  While  walking  along  the  aisle,  his 
eye  was  attracted  by"  some  ladies'  kid  gloves,  of 

12* 


274  PRESENTS. 

superior  quality.  "  Ah !"  said  he,  "  you  keep  these 
articles,  do  you?  They  are  really  very  soft  and 
beautiful !" 

"  Yes,  sir,"  answered  the  proprietor,  at  the  same 
time  wrapping  up  a  dozen  in  some  fine  tissue-paper — 
"put  those  in  your  pocket.  Yes,  yes,  do!"  over- 
coming the  apparent  reluctance  of  his  visitor,  by 
unaffected  earnestness. 

The  same  scene  was  acted  over  again  on  the  next 
occasion,  when  the  merchant  had  paper  discounted. 
A  third  rehearsal  taught  him  to  add  a  dozen  of  the 
finest  kid  gloves  to  the  legal  rate  of  seven  per  cent, 
whenever  he  obtained  an  accommodation  at  that 
bank. 

A  Clerk  took  lodgings  at  a  hotel  during  the  absence 
of  his  family  in  the  country,  which  led  to  the  land- 
lord opening  an  account  with  the  bank.  In  the 
"  progress  of  human  events,"  baskets  of  brown  stout 
were  left  at  the  residence  of  one  of  the  officers,  and 
dining  privileges  were  enjoyed  without  cost.  The 
result  in  this  case  was  a  loan  of  over  twenty  thousand 
dollars  on  inferior  securities ;  and  although  it  was 
finally  paid,  the  process  involved  transactions  of 
questionable  propriety. 

A  Dealer,  who  was  impatient  to  rectify  his  accounts, 
urged  a  Book-keeper  to  balance  his  bank-book.  After 
waiting  several  days,  the  request  was  repeated,  and 
the  clerk  promised  that  it  should  be  done.  "  But," 
he  added,  "  you  haven't  sent  me  that  umbrella  yet !" 
— It  was  added  to  his  wardrobe. 


PKESENTS.  275 

It  was  formerly  the  practice,  in  some  banks,  for  the 
clerks  to  order  from  the  stationers  the  articles  neces- 
sary to  their  convenience,  such  as  pencils,  rules, 
erasers,  blotting-paper,  and  other  things.  And  it 
was  not  considered  improper  for  the  stationer  to  dis- 
tribute small  presents  among  them  occasionally.  A 
better  system  of  economy  has  been  established  in 
later  years. 

Bank  clerks  receive  presents  thoughtlessly,  and 
mostly,  perhaps,  without  committing  themselves  to 
an  improper  understanding  with  dealers.  They  are 
not  alive  to  the  danger  of  being  made  accessory  to 
fraud,  and  to  the  consequent  destruction  of  character. 
The  officers  have  no  alternative,  but  to  dismiss 
immediately  a  clerk  who  allows  himself,  even  by  acci- 
dent, to  be  brought  into  collusion  with  a  dealer.  The 
collusion  of  silence  only,  if  a  fellow-clerk  is  in  fault, 
would  be  fatal  to  him.  In  a  bank  of  strict  discipline, 
the  discovery  that  a  clerk  had  received  presents  from 
a  dealer  would  lead  to  the  expulsion,  both  of  himself 
and  the  donor,  from  all  connection  with  the  institu- 
tion— so  important  and  critical  is  the  point  of  this 
most  pernicious  practice.  Every  dealer  should  know 
that  a  bank  clerk  has  no  favors  to  bestow.  His  duty 
covers  every  requisition  that  can  be  made  of  him 
with  respect  to  the  business. 

In  every  case  where  a  bank  clerk  has  been 
betrayed  into  collusion,  the  worst  consequences  have 
fallen  on  himself.  Whatever  advantages  have  resulted 
to  others,  he  has  reaped  none ;  for,  from  the  first 
moment,  he  has  been  in  the  power  of  his  betrayer, 
who  takes  all  the  gain,  and  leaves  to  him  the  shame 


276  PRESENTS. 

and  the  disgrace. — Can  any  trifling  gift  compensate 
for  sucli  a  risk  ? 

Presents  from  a  dealer  are  always  annoying  to  a 
high-minded  Lank  officer.  They  may  be  interpreted 
to  imply  that  he  can  be  influenced  by  them  to  do 
what  is  opposed  to  his  sense  of  duty  or  justice.  In 
such  case,  the  donor  must  sink  in  his  esteem,  and 
their  effect  be  precisely  opposite  to  what  is  expected. 

Mr.  George  Curtis,  the  first  Cashier  of  the  Bank 
of  Commerce,  and  late  President  of  the  Continental 
Bank,  was  occasionally  the  unwilling  recipient  of  "  a 
present."  His  well-known  high  sense  of  honor  and 
propriety  would  have  protected  him  against  all  suspi- 
cion of  improper  influence  in  the  administration  of 
his  trust ;  but  so  sensitive  and  scrupulous  was  he  on 
the  subject,  that  he  uniformly  placed  the  article, 
whatever  it  was,  in  the  discount-room,  and  related  its 
history  at  the  next  meeting  of  the  Board  of  Directors. 

Mr.  Curtis  was  one  of  our  most  accomplished  and 
intelligent  bankers.  He  took  an  active  part  in  the 
organization  of  the  Clearing  House,  and  was  one  of 
the  few  persons  in  New  York,  connected  with  finance, 
who  made  it  a  matter  of  serious  study. 


BANK   DISCIPLINE.  277 


CHAPTER   XYI. 

BANK      DISCIPLINE. 

The  foregoing  chapters  contain  a  description  of  the 
different  departments  of  a  bank,  of  the  duties  of  the 
oflficers  and  clerks,  and  of  their  daily  experience. 

It  will  occur  to  the  reader,  that  there  is  one  pecu- 
liar feature  running  through  the  whole  system ;  and 
that  is,  tliQ  apprehension  of  fraud.  It  is  suggested 
with  every  clerk,  in  the  beginning,  by  the  requisition 
of  a  bond  of  indemnity  against  it ;  and  it  is  never  lost 
sight  of  for  an  instant.  The  constant  purpose  of  the 
managers  is,  to  devise  a  system  of  accounts  to  prevent 
it.  Every  thing  else  is  easy  enough.  But  that  has, 
hitherto,  been  the  one  thing  that  no  vigilance  could 
forestall. 

The  same  idea  exists  in  the  public  mind.  Although 
there  is  not  an  equal  amount  of  any  other  business  in 
the  world  transacted  with  so  little  fraud,  yet  the  com- 
mon suspicion  is  much  more  alive  with  respect  to  it 
in  this  business,  than  in  any  other.  It  is  certain  that 
there  are  fifty- three  dry-goods,  jewellers,  and  fancy 
stores  in  the  city  of  ITew  York  from  which  more 
money  or  property  is  stolen  every  year  than  from  the 
fifty-three  banks,  and  the  fact  is  hardly  recognized. 
In  this  view,  the  presentment  is  a  very  strong  testi- 
mony to  the  integrity  of  bank  clerks. 


278  BANK   DIBCDPLENE. 

The  anxiety  of  officers  is,  after  all,  induced  by  the 
possihility^  rather  than  the  suspicion  of  dishonesty  in 
the  clerks.  It  would  be  most  unfortunate  for  both 
parties,  if  the  governing  sentiment  of  the  former  were 
not  one  of  thorough  confidence.  The  moment  that  it 
ceases  to  be  so,  the  clerk  is  dismissed  ;  and  dismissal 
on  this  ground  is  very  rare,  although  the  number  of 
clerks  in  the  city  banks  is  near  one  thousand.  On 
the  other  hand,  the  cases  are  also  rare,  in  which  a 
clerk,  seeking  promotion  in  another  bank,  is  not 
cheerfully  assisted  by  the  officers  with  whom  he  has 
been  employed.  It  is  recognized  as  his  right  to  refer 
to  them  for  testimony  of  capacity  and  character ;  and 
no  petty  considerations  of  inconvenience  from  loss  of 
valuable  services  are  allowed  to  have  influence.  The 
terms  of  intercourse  between  them  are  uniformly  and 
mutually  respectful  and  polite.  No  insulting  supe- 
riority is  assumed,  nor  mean  servility  manifested  ; 
but  the  common  feeling  is  rather  that  of  partners  in 
the  same  interest. 

Neither  is  the  possibility  of  fraud  suggested  by 
reflection  on  the  personal  character  of  the  clerk,  but 
by  outside  circumstances.  The  embezzlement  of 
bank  funds,  in  most  cases,  has  either  had  its  origin  in, 
or  been  greatly  aggravated  by  the  vice  of  gambling ; 
and  this  has  generally  been  brought  about  by  the 
persuasion,  or  the  acts  of  persons  connected  with 
gambling-houses.  The  bank  clerk  or  the  bank  officer 
is  a  promising  victim,  if  he  can  be  induced  to  make  a 
first  experiment  in  this  direction ;  and  a  single  victim 
will  reward  many  plans.  The  author  will  cite  but 
one  instance  of  several  that  have  come  to  his  know- 


FLANS   OF   GAMBLERS.  279 

ledge  within  a  few  years  past.  A  Paying  Teller 
accepted  the  invitation  of  a  friend  to  take  a  ride  into 
the  country.  The  further  end  of  the  ride  proved  to 
be  a  house  frequented  by  sporting  characters.  He 
believed  this  to  be  accidental,  until  a  subsequent  pro- 
position, after  an  interval  of  several  weeks,  revealed 
the  true  character  and  design  of  his  polite  friend. 
That  plans  are  deliberately  laid  to  entrap  the  unwary 
into  the  practice  of  gambling,  is  well  known.  It  is, 
unfortunately,  a  very  common  vice,  and  easily  con- 
cealed. A  masonic  honor  makes  one  gambler  safe 
with  another ;  but  what  is  more  difficult  to  explain, 
men  who  have  no  interest  but  to  expose  a  vice  which 
destroys  all  integrity  of  character,  aid  in  its  conceal- 
ment. After  the  development  of  the  fraud  described 
on  page  155,  several  respectable  dealers  of  the  bank 
came  forward  and  said  : 

"  Didn't  you  know  that  that  fellow  was  a  gambler  ? 
— ^Why,  I've  known  it  for  more  than  a  year." 

"  Why  didn't  you  tell  us  of  it  ?" 

"Because  it  wasn't  my  business." 

The  moral  of  this  anecdote  might  have  been  appre- 
ciated, if  the  informant's  house  had  been  burned 
down ;  and  a  friend  had  called  at  the  ruins  on  the 
next  morning  to  say  :  "I  saw  a  man  in  the  act  of 
setting  fire  to  it." 

The  knowledge  of  such  facts  as  these  is  the  root 
of  the  bank  officer's  anxiety  on  behalf  of  his  clerks.  It 
induces  a  more  attentive  study  of  their  character,  and 
a  desire  to  know  something  of  their  habits  and  asso- 
ciations. Their  hours  of  leisure  are  many,  compared 
with  those  of  commercial  clerks,  affording  time  either 


280  BANK   DI8CIPLDIE. 

for  idle  dissipation  or  mental  improvement ;  and  the 
manifestation  of  these  opposite  dispositions  cannot  be 
concealed,  nor  fail  to  command  respect,  or  to  excite 
distrust.  However  uncultivated  may  be  the  officer 
himself,  he  appreciates  the  fact  that  the  mental  habit 
is  a  better  safeguard  against  embezzlement  than  can 
be  put  into  a  legal  instrument.  The  author  is  ac- 
quainted with  a  Paying  Teller  whose  healthful  ram- 
bles before  and  after  bank  hours  have  made  him  an 
accomplished  botanist ;  with  another,  who  is  a  diligent 
student  in  political  economy  ;  and  with  a  third,  who 
is  devoted  to  natural  philosophy.  It  is  almost  need- 
less to  say,  that  these  gentlemen  enjoy,  in  an  unusual 
degree,  the  respect  and  confidence  of  their  superiors, 
and  that  their  chances  of  promotion  are  greatly  im- 
proved by  their  habits. 

Finally,  however,  the  real  safeguard  of  a  bank 
against  collusion  and  fraud  from  without,  as  well  as 
from  embezzlement  within,  is  to  be  found  in  the  gen- 
eral organization  of  its  accounts,  and  in  its  discipline. 

Nothing  short  of  daily  personal  supervision  of  all 
the  postings,  additions,  and  transfers  in  the  work  of 
ten  or  fifteen  desks,  could  give  to  the  bank  officers  a 
positive  assurance  that  there  is  no  error  or  fraud  con- 
cealed in  the  accounts.  This  being  impossible,  the 
next  best  thing  is  to  prove  the  accuracy  of  results. 
When  a  dealer's  book  is  balanced,  and  the  balance 
agrees  with  his  own  cash-book,  the  presumption  is, 
that  the  account  is  correct  in  its  details,  because  the 
same  result  is  attained  by  two  persons,  each  inde- 
pendently of  the  other,  and  by  different  processes. 
On  this  theory,  one  of  our  city  banks  has  adopted  a 


EEPOKTS. 


281 


system  of  daily  rejports  of  the  reciprocal  departraents, 
the  separate  entries  of  which  are  checked  off  against 
each  other.  The  follomng  are  the  principal  of  these 
reports  for  one  day : 

PAYING  TELLER'S  DAILY  REPORT. 


Balance  of  cash  from  previous  day . 
Received  from  the  other  Tellers. . . 


"            "    Clearing  House. 
Added  to  Exchanges 


Paid  Clearing  House  (Exchanges) 

"  "  balance,  in  specie 

"    Checks  at  counter  in  specie 10,000 

"        "  "  bills 50,000 

"        "      in  Exchanges 1,600,000 


"    Receiving  Teller. 

"    Note  TeUer 

"    Uncurrent  Teller. 


Balance  of  cash  carried  to  next  day 

Completed,  3i  o'clock.     Difference  in  cash, 


4000000 
1  500  000 


400 


660 


000 


000 


500 
700 
200 

400 

300 


060 
25 
10 
16 


3410 

3990 

7  400 


000 
000 
000 

000 

000 


000 
000 
000 
000 

000 
000 

000 


0. 


RECEIYING  TELLER'S  DAILY  REPORT. 


Number  of  deposits,  275 — amount 

Received  from  Paying  Teller 

Deduct  checks  on  this  bank,  charged. 


Balance  of  cash 

Consisting  of: 

Specie 

Clearing  House  matter. 

Ofifice  matter 

Foreign  checks 


000  000!  15 
251000  116, 
17 


5  000  18 

875000  19 

5600  20 

19400  21 


025 
120 


905 


905 


000 
000 


000 


000 


Completed,  4  o'clock.    Difference  in  cash,  0. 


282 


BANK   DISCIPLINE. 


NOTE  TELLER'S  DAILY  REPORT. 


Amount  credited 

"        received  from  Paying  Teller. , . . 
"  "  "     Uncm-rent  Teller. 


Deduct  checks  on  this  bank  charged 

"       am't  added  to  morning  Exchanges 


Balance 

Consisting  of: 

Specie 

Clearing  House  matter. 
Office  matter 


900 
10 
60 


000 
000 
000 


150  000 
200  000 


40  500 

560  000 

9  500 


960 
350 


610 


610 


000 


OOP 
000 


000 


Completed  3.40  o'clock.     Difference  in  cash,  0. 

Number  of  notes  paid,  350 — protested,  12 — of  discounted,  none. 


EXCHANGES  SENT  TO  CLEARING  HOUSE. 


Receiving  Teller's  footing. 
Note  Teller's  footing 


Added  by  Note  Teller. 
Total 


750 
350 


000 
000 


30 


100 
200 


300 


000 
000 


000 


EXCHANGES  RECEIVED  FROM  CLEARING  HOUSE. 


Number  of  checks,  2,500. 

Am't  of  checks  on  Commercial  Bank 

1 

450 

000 

Bills  of        "                    "             "     

45 

000 

— 



1 

495 

000 

Redemptions  for  other  banks  in  bills 

65 

000 

"                        "             in  checks. . . 

124 

000 

— 

— 

189 

000 

31 

1 

16 
700 

000 

Total 

000 

Completed 


o'clock.     DifFerence  in  cash,  0. 


REPORTS. 


283 


TJNCURRENT  NOTE  TELLER'S  DAILY  REPORT. 


Receiyed  from  Paying  Teller. 

"  "      Correspondents 

"  "      City  depositors 

"  "     other  banks,  redemptions. 


Deduct  redemptions  charged. 


Paid  Note  Teller. 
Office  matter. . . . 


Amount  rec'd  for  credit  on  the  following  dayl 
Completed, o'clock.     Difference  in  cash,  0, 


000 
000 


32 


15 
80 
15 

60 

160 
35 


75 


15 


000 
000 
000 
000 

000 
000 

000 


ODD 


25  00O 


CHECK  CLERK'S  DAILY  REPORT. 


Amount  of  Paying  Teller's  checks : 

In  Exchanges — domestic 

foreign , 

Checks  paid  at  counter 


Receiving  Teller's  checks — domestic 

"        foreign 

Note  Teller's  checks — domestic 

General  Ledger  checks,  redemptions  charged 
Completed, o'clock. 


400 

200 

60 


000 
000 
000 


660 
120 

19 
150 

36 


000 
000 
400 
000 
000 


PORTER'S  DAILY  REPORT. 


Specie  received  by  Receiving  Teller. 
"  "  Note  Teller 


GENERAL  BOOK-KEEPER'S  DAILY  REPORT. 


5000 
40500 


Balance  of  cash 

44 
45 
46 

47 

3 
1 

990 
000 
900 

000 

Amount  of  Receiving  Teller's  credits 

000 

"         Note  Teller's  credits 

000 

"         certifications 

. . 

7O0I0OO 

284  BANK    DISCIPLINE. 

CERTIFICATION  CLERK'S  DAILY  REPORT. 


.185 


Number  of  checks  certified,  250. 

Amount 1|  48 1| $700,000 

Completed,  SJ  o'clock. 


COMMERCIAL   BANK. 


No.  Letters  received  from  Post  Office,  A.  M 225 

"  "  "  P.  M 15 

800 


No.  Letters  sent,  295. 

185        Amount  of  Postage,  $11.50. 


COLLECTION  CLERK'S  DAILY  REPORT. 


.185 


No.  of  Sight  Drafts  sent  out  for  payment 150 

"      Time  Drafts  sent  out  for  acceptance 50 

"      City  Notes  and  Acceptances  registered 270 

"      Drafts  protested 3 

"      Foreign  Notes  and  Drafts  registered 150 

Time  completed,  3^  o'clock. 


These  reports  are  laid  on  the  Cashier's  desk  every 
day,  after  the  close  of  business,  by  the  respective 
clerks.  For  brevity  of  explanation,  the  items  will  be 
designated  by  the  number  opposite  to  each. 

Number  1  is  the  balance  of  cash  brought  forward 
from  the  previous  day.  It  is  verified  by  the  report 
of  the  General  Book-keeper  for  that  date.  ITumber 
2  is  the  sum  of  the  several  Tellers'  receipts,  also  for  the 
previous  day,   including  the   exchanges,   the  office 


REPORTS.  285 

matter,  and  the  specie.  Number  3  is  verified  by  num- 
ber 31 ;  4,  by  26  ;  5  is  the  entire  amount  of  cash  from 
which  the  payments  are  to  be  made.  ISTumber  6  is 
verified  by  30  ;  7,  by  subtracting  the  amount  sent  to 
the  Clearing  House  (6)  from  that  received  (3) ;  8,  by 
37 ;  9,  by  16  ;  10,  by  23  ;  11,  by  32 ;  12,  by  addition; 
18,  by  the  balance  test  and  by  44 ;  14,  by  5;  15, 
by  45  ;  17,  by  38  ;  18,  by  42  ;  19,  20,  28,  and  29,  by 
the  reports  of  the  succeeding  day  ;  21,  by  39  ;  22,  by 
46  ;  24,  by  35  ;  25,  by  40 ;  27,  by  43 ;  34,  by  41  ; 
36,  by  the  Paying  Teller's  report  of  the  next  day  ;  and 
47,  by  48. 

The  report  of  every  clerk  is  thus  proved  by  the 
report  of  another  clerk ;  and  mostly  the  proof  of  one 
is  established  by  comparison  with  the  items  of  several 
others,  each  distinct.  The  Cashier  is  enabled  by  this 
system  to  check  off  the  results  of  each  day's  business 
in  all  the  departments,  in  the  space  of  fifteen  minutes. 

When  a  report  shows  extraordinary  results,  an 
explanation  is  required  on  the  back  of  the  ticket. 
For  example,  if  the  Paying  Teller  should  pay  out  an 
unusual  amount  of  coin,  a  memorandum  on  the  back 
of  the  report  would  give  the  names  of  the  drawers, 
and  for  what  purpose  it  was  required — perhaps  to 
pay  duties,  or  for  shipment.  If  any  discounted  notes 
are  protested,  the  Kote  Teller  writes  on  the  back  of 
his  reports  the  amounts,  with  the  names  of  the 
indorsers  and  drawers.  The  Certification  Clerk  com- 
monly notes  the  names  of  the  dealers  who  have 
obtained  the  largest  certifications. 

The  protection  gained  by  these  reports  is  measur- 
ably secured  by  other  methods  of  supervision  in  many 


286  BANK   DISCIPLINE. 

of  our  city  banks.  It  cannot  be  said  that  they  pre- 
clude the  possibility  of  fraud;  but  they  make  an 
incredible  extent  of  collusion  necessary  to  carry  it 
on  continuously  and  successfully. 

In  the  same  institution,  the  record  of  certified  checks 
has  been  given  to  a  separate  clerk ;  which,  in  connec- 
tion with  the  separate  counting  of  the  Exchanges,  is 
an  effectual  bar  to  ^buse  by  the  Paying  Teller,  of  the 
power  of  certification.  The  check  is  first  recorded 
by  the  Certification  Clerk,  who  writes  his  initials  upon 
it,  and  it  is  then  certified  by  the  Paying  Teller.  "When 
it  returns  through  the  Clearing  House  for  redemp- 
tion, it  comes  to  the  Assistant  or  Exchange  Teller, 
by  whom  it  is  checked  off  on  the  Certification  List, 
before  it  passes  into  the  hands  of  the  Paying  Teller. 

Under  this  plan,  a  fraudulent  certification,  to  be 
carried  over  a  single  day,  must  have  the  collusion  of 
at  least  four  persons — three  clerks  in  the  bank,  and  a 
confederate  outside.  If  this  is  not  guard  enough 
against  the  dishonest  issue  of  certified  checks,  it  is 
hardly  to  be  secured  by  human  vigilance. 


HOW  TO   TKANSACT   BUSINESS   WITH    A   BANK.  287 


CHAPTEE    XYII. 

HOW   TO   TRANSACT   BUSINESS    WITH   A   BANK. 

If  you  are  a  stranger  to  the  officers,  and  wish  to 
open  an  account,  get  some  respectable  person  who  is 
known  to  them  to  introduce  you,  either  to  the  Presi- 
dent or  Cashier,  Do  not  ask  him  to  vouch  for  any- 
thing beyond  your  integrity  and  fairness  in  dealing. 
Tell  your  own  story  about  capital,  business,  property, 
and  other  matters  which  pertain  to  your  commercial 
prospects  —  and  exaggerate  nothing.  There  is  no 
humbug  that  will  recoil  upon  yourself  so  surely  as  an 
attempt  to  palm  off  big  tales  on  a  bank  officer.  Your 
deposit-tickets,  your  checks,  your  bills  receivable, 
your  indorsements,  and  your  ledger  account,  make 
together  a  history  that  dispels  all  shams,  and  leaves 
little  to  say.  A  man  who  begins  with  an  exaggerated 
account  of  himself  is  measured  by  it  afterwards,  and 
appears  relatively  small. 

Borrow  no  money  of  your  neighbors  to  swell  your 
first  deposits.  This  is  a  common  practice,  with  the 
idea  that  it  will  make  a  favorable  impression  on  the 
officers.  They  see  through  it  at  once,  and  take  it  as 
a  proof  of  weakness. 

Never  try  to  bargain  for  special  indulgences,  such 
as  the  certification  of  your  checks  before  your  deposit 
is  made  or  the  discount  of  your  paper  by  the  officers 


288  HOW   TO   TRAJ^SACT   BUSINESS    WITH   A   BANK. 

without  its  submission  to  the  Board  of  Directors.  The 
character  of  your  account  will  settle  these  matters 
much  more  satisfactorily  to  all  parties. 

Let  your  intercourse  with  the  officers  be  candid  and 
respectful,  and  be  sparing  in  your  personal  solicita- 
tion for  discounts.  Choose  the  earlier  hours  of  the 
day  for  your  interviews,  and  especially  avoid  the  last 
hour  before  three  o'clock. 

Write  your  signature  with  the  same  freedom  that 
you  do  in  yom-  own  office,  and  never  vary  the  style 
of  it. 

Teach  your  clerks  to  use  always  the  deposit-tickets 
furnished  by  the  bank,  to  examine  the  date  and 
indorsement  of  every  check,  and  also  to  see  that  the 
writing  of  the  amount  corresponds  with  the  figures. 
Instruct  them  to  learn  and  to  follow  the  rules  of  the 
bank  with  respect  to  getting  checks  certified  before 
deposit. 

Make  your  deposit  as  early  in  the  day  as  possible. 
If  you  are  accustomed  to  have  many  checks,  or  large 
packages  of  bank  bills,  it  is  better  to  make  two  de- 
posits— one  at  an  early  hour — than  to  hand  in  all  at 
once  just  at  three  o'clock.  Never  change  checks  with 
other  people  merely  to  make  larger  figures.  It  causes 
needless  labor  to  the  bank  clerks,  makes  you  respon- 
sible for  the  debts  of  others,  and  is  a  real  prejudice 
to  your  credit. 

Kever  try  to  put  in  your  deposit  before  those  in 
advance  of  you,  but  take  your  place  in  the  line,  and 
wait  your  turn  patiently.  Never  make  deposits  with- 
out your  bank-book,  if  you  can  help  it.  Avoid  all 
unnecessary  conversation  with  the  clerks,  especially 
with  the  tellers. 


PBACTICAL  KULE8.  289 

Never  get  angry  if  the  Paying  Teller  examines 
your  account  before  certifying  your  check ;  nor  if  he 
keeps  you  waiting  a  few  seconds  before  he  can  pay  it. 

Make  it  an  invariable  rule  to  give  checks  only  out 
of  your  own  check-book,  and  at  your  own  ofi^ce ;  and 
never  write  a  check  payable  to  order,  when  you  can 
as  well  do  it  to  "  the  hearer.''''  "When  you  want  the 
indorsement  of  the  person  to  whom  you  give  it,  let 
him  indorse  it  in  your  presence,  and  write  your  own 
name  below,  to  assure  the  Teller  that  it  is  right. 

Never  give  out  checks  dated  ahead.  When  you 
have  need  to  cut  checks  out  of  the  end  of  your  check- 
book, mark  in  the  margin  what  they  are  for  —  to 
supply  duplicates,  or  otherwise.  Keep  your  check- 
books out  of  sight  and  reach  of  strangers.  Never  give 
a  sti'anger  a  check  unless  you  have  some  evidence 
that  he  is  not  seeking  it  for  fraudulent  purposes. 
Never  draw  checks  against  your  account,  on  the 
ground  that  you  have  sent  some  abroad  that  will  not 
return  immediately.  Always  consider  a  check  paid 
when  you  give  it  out. 

Never  attempt  to  pay  a  note  with  an  uncertified 
check,  at  a  bank  where  you  keep  no  account.  If  you 
make  your  promissory  notes  payable  at  bank,  give 
the  Paying  Teller  a  list  of  them  on  Monday  morning 
for  the  current  week,  or  send  him  your  bank-notices 
on  the  day  of  their  maturity. 

When  you  want  notes  discounted,  offer  them  on  the 
regular  days,  and  in  good  season  for  the  clerk's  con- 
venience. Never  call  on  bank  officers  to  discount 
notes  between  the  Board  meetings,  if  you  can  wait 
until  the  following  discount  day.     Do  not  put  off  the 

13 


290  HOW    TO   TRANSACT   BUSINESS    WITH   A   BANK. 

oflfering  of  notes  for  discount  until  the  last  day  of 
your  need.  It  is  better  to  keep  from  ten  days  to  a 
fortnight  ahead,  and  to  let  your  balances  remain  in 
the  bank  until  you  require  them.  The  loss  of  interest 
is  very  trifling  at  best.  You  lose  more  by  anxiety 
and  unfitness  for  business. 

When  you  want  your  bank-book  balanced,  or 
entries  made  in  it,  apply  to  the  Book-keeper  early  in 
the  day.  Never  ask  a  service  of  him  later  than  one 
o'clock  if  you  can  wait  till  the  next  morning.  Do 
not  allow  your  book  to  run  too  long  without  being 
balanced,  and  when  balanced,  examine  your  cancelled 
checks  without  delay. 

If  the  bank  ledger  shows  a  larger  balance  in  your 
favor  at  any  time,  than  your  own  check-book, 
acquaint  the  Book-keeper  with  it  immediately.  As 
you  value  your  credit  with  the  bank,  never  take 
advantage  of  deposits  wrongly  entered  to  your  account, 
but  let  your  dealings  be  strictly  honorable. 

If  you  have  any  cause  of  complaint  against  the 
clerks,  state  it  directly  to  the  officers.  The  clerks 
act  under  their  instructions,  which  they  dare  not  dis- 
obey. 

The  Book-keeper  is  the  proper  person  to  apply 
to,  to  know  if  collection  notes  are  passed  to  your 
credit. 

The  Note  Clerk  will  inform  you  of  the  maturity  of 
notes  for  a  future  time.  In  the  case  of  discounted 
notes  apply  to  the  Discount  Clerk.  The  Discount 
Clerk,  or  the  Note  Clerk,  will  commonly  tell  the 
exchange  or  charges  for  collecting  foreign  paper. 

"When  you  have  notes  to  send  abroad  for  collection. 


PRACTICAL  KULES.  291 

deposit  them  in  ample  time  for  deliberate  record  and 
transmission  by  the  bank. 

If  the  drawers  of  any  notes  lodged  as  collateral  to 
loans  or  discounts  should  fail,  do  not  wait  for  the 
bank  officers  to  discover  it,  but  substitute  good  notes 
for  them  without  delay. 

The  observance  of  these  rules,  and  such  others  as 
may  be  suggested  by  your  own  observation,  will  be 
a  great  economy  of  time  to  yourself  as  well  as  to  the 
bank  clerks,  and  promote  your  real  credit  with  the 
institution. 

Dealers  should  always  instruct  inexperienced  clerks 
not  to  transact  business  with  strangers  outside  of  the 
counter.  If  they  want  advice  how  to  proceed,  let 
them  ask  any  clerk  who  is  not  too  busy  to  answer,  or 
go  direct  to  the  officers.  There  are  often  well-dressed 
persons  in  the  lobby,  or  about  the  counters,  watching 
for  those  who  appear  at  a  loss,  and  ready  to  assist 
them  very  politely.  An  old  merchant  sent  his  car- 
man to  draw  a  check  for  two  hundred  dollars.  It 
was  his  first  message  to  a  bank.  A  gentleman,  observ- 
ing him  to  be  a  little  gawky,  said  very  kindly  :  "  You 
want  the  money  for  that  check — this  is  the  place  !" 
and  took  him  to  the  proper  teller,  who  paid  him  in 
large  bills.  "  Now,"  he  added,  "  you  want  some  of 
this  in  small  notes.  Come  with  me."  He  took  him 
into  a  broker's  office  in  the  same  building,  changed 
the  bills,  and  managed  to  retain  thirty  dollars  in  his 
own  possession.  The  teller  and  broker  supposed  the 
two  to  be  friends,  and  the  carman  thought  that  the 
bank  was  very  accommodating,  to  keep  a  clerk  only 
to  help  strangers ! 


292 


THE   NEW    YORK   CLEARING    HOUSE. 


CHAPTER  XYni. 

THE  NEW  YOKK  CLEARING  HOUSE. 

An  account  of  the  Clearing  House  may  very  pro- 
perly be  introduced  by  a  sketch  of  the  old  plan  of 
exchange  and  settlement  between  the  banks. 

During  the  few  years  following  1849,  the  number 
of  banks  in  New  York  was  increased  from  twenty- 
four  to  sixty.  To  make  the  daily  exchange,  one-half 
of  them  must  necessarily  send  to  the  other  half.  But 
this  plain  division  of  the  service  was  not  convenient 
or  economical.  It  was  found  better  for  all  of  them 
to  do  a  part  of  the  distribution,  and  thus  the  whole 
sixty  Porters  were  in  motion  at  the  same  time.  Each 
carried  a  book  of  entry,  and  the  money,  for  every 
bank  on  which  he  called.  The  Paying  Teller  of  the 
receiving  bank  took  the  exchange  and  entered  it  on 
the  credit  side  of  the  book ;  then  he  entered  on  the 
debit  side  the  return  exchange,  and  gave  it  with  the 
book  to  the  Porter,  who  hastened  to  the  next  bank  in 
his  circuit.  The  Porters  crossed  and  recrossed  each 
others'  footsteps  constantly ;  they  often  met  in  com- 
panies of  five  or  six  at  the  same  counter,  and  retarded 
each  other ;  and  they  were  fortunate  to  reach  their 
respective  banks  at  the  end  of  one  or  two  hours.  This 
threw  the  counting  of  the  exchanges  into  the  middle 


ZHK   NEW    YOKK   CLEAEING   HOUSE.  293 

and  after  part  of  the  day,  when  the  other  business  of 
the  hank  was  becoming  urgent. 

Instead  of  attempting  a  dail}""  adjustment  of  accounts, 
which  would  have  consumed  several  hours,  and  caused 
much  annoyance,  it  became  a  tacit  agreement,  that  a 
weekly  settlement  of  balances  should  be  made  after 
the  exchange  of  Friday  morning,  and  that  inter- 
mediate draft-drawing  should  be  suspended.  The 
weaker  and  more  speculative  banks  took  advantage 
of  this  by  borrowing  money  on  Thursday,  which 
restored  their  accounts  for  Friday  ;  and  its  return  on 
Saturday  threw  them  again  into  the  debit  column.  In 
this  way,  the  banks  distant  from  "Wall  street  managed 
to  carry  an  inflated  line  of  discounts,  based  on  debts 
due  to  other  institutions.  It  became  an  affair  of 
cunning  management  by  some  to  run  a  small  credit  of 
two  or  three  thousand  dollars  each  with  thirty  or 
more  banks,  making  a  total  of  one  hundred  thousand 
dollars,  on  which  they  discounted  bills.  Conse- 
quently, the  Friday  settlements  proved  to  be  no  settle- 
ments at  all,  but  a  prodigious  annoyance.  As  soon 
as  the  Paying  Teller  or  his  Assistant  completed  the 
Exchange  Balance  List,  the  Cashier  of  each  bank  would 
draw  checks  for  every  debt  due  to  him  by  other 
banks,  and  send  out  the  Porters  to  collect  them.  A 
draft  on  one  in  favor  of  another  might  settle  two 
accounts  at  once,  but  there  was  no  understanding  that 
made  it  possible  to  secure  that  small  economy;  or  if 
there  was,  it  was  disregarded.  The  sixty  Porters 
were  out  all  at  once,  with  an  aggregate  of  two  or 
three  hundred  bank-drafts  in  their  pockets,  balking 
each  other,   drawing   specie    at    some    places,   and 


294.  THE   NEW   YORK   CLEARING   HOUSE. 

depositing  it  in  others ;  and  the  whole  process  was 
one  of  confusion,  disputes,  and  unavoidable  blunders, 
of  which  no  description  could  give  an  exact  impres- 
sion. 

After  all  the  draft-drawing  was  over,  came  the 
settlement  of  the  Wall  street  Porters  among  them- 
selves. A  Porters^  Exchange  was  held  on  the  steps 
of  one  of  the  Wall  street  banks,  at  which  they 
•accounted  to  each  other  for  what  had  been  done 
during  the  day.  Thomas  had  left  a  bag  of  specie  at 
John's  bank  to  settle  a  balance,  which  was  due  from 
William's  bank  to  Robert's ;  but  Robert's  bank  owed 
twice  as  much  to  John's.  What  had  become  of  that ! 
Then  Alexander  owed  Robert  also,  and  William  was 
indebted  to  Alexander.  Peter  then  said,  that  he  had 
paid  Robert  by  a  draft  from  James,  which  he,  James, 
had  received  from  Alfred  on  Alexander's  account. 
That,  however,  had  settled  only  half  the  debt.  A 
quarter  of  the  remainder  was  cancelled  by  a  bag  of 
coin,  which  Samuel  had  handed  over  to  Joseph,  and 
he  had  transferred  to  David.  It  is  entirely  safe  to 
say,  that  the  Presidents  and  Cashiers  of  the  banks 
themselves  could  not  have  untangled  this  medley. 
Each  Porter  had  his  tally,  and  by  checking  off  and 
liberating,  Urst  one  whose  account  was  least  com- 
plicated, and  then  another,  they  finally  achieved  a 
settlement. 

This  scene  was  re-enacted  on  every  Friday.  In 
consequence  of  the  Porters  being  withdrawn  from 
their  regular  service  in  the  bank,  extra  labor  was 
imposed  on  others,  responsibilities  became  mingled 
together,  and  the  ofiicers  were  kept  for  the  whole  day 


THE   NEW    YORK    CLEARING    HOUSE.  295 

in  a  state  of  distraction  and  anxiety.  The  Paying 
Tellers  were  subject  to  frequent  interruption,  as  they 
were  obliged  to  receive  and  deliver  all  specie. 

Not  the  least  irritating  featnre  of  the  case  was.  that 
a  single  small  draft  by  any  one  bank  on  any  other 
induced  a  general  drawing,  and  all  became  involved 
in  commotion,  and  "  war"  upon  each  other.  If  time 
were  allowed,  the  debtor  banks  would  finally  be 
obliged  to  pay  the  liquidating  balance ;  but  three 
o'clock  arrested  the  process,  and  the  banks  where 
the  demand  was  then  in  force  were  obliged  to  dis- 
burse the  coin.  It  was  not  unusual  for  a  debtor  bank 
to  add  fifty  thousand  dollars  to  its  specie  at  the  close 
of  the  day,  with  its  debt  doubled,  while  a  creditor 
bank  to  half  a  million  in  the  general  account,  would 
find  itself,  at  three  o'clock,  depleted  of  one  or  two 
hundred  thousand  dollars  in  coin. 

The  question  had  been  occasionally  discussed 
whether  these  difficulties  might  not  be  obviated  by 
some  other  mode  of  exchange  ;  but  without  approach- 
ing a  practical  issue.  It  began  now  to  be  more 
seriously  entertained. 

The  subject  was  discussed  in  all  its  bearings,  at 
informal  meetings  of  bank  officers,  and  steps  were 
taken  to  obtain  general  co-operation  in  some  partial 
and  experimental  plans.  Such,  however,  was  the 
diversity  of  opinions,  even  among  those  who  were 
most  anxious  to  promote  the  object,  that  nearly  a 
year  passed  before  it  was  thought  expedient  to  issue 
notices  for  a  meeting  to  take  decisive  action  upon  it. 
Then,  it  encountered  much  silent  and  determined 
opposition.    Those  banks  which  had  profited  most 


296  THE   NEW   YORK   CLEARING   HOUSE. 

by  enforced  credit  balances,  feared  the  restraint  and 
domination  of  the  others  ;  and  these  had  prejudices 
to  overcome,  and  a  long  score  of  annoyances  to  forget; 
but  it  was  manifest  that  the  subject  could  be  deferred 
no  longer.  A  plan  was  finally  adopted,  and  went  into 
effect  on  the  first  of  October,  1853.  Its  complete 
success  soon  banished  all  feelings  but  those  of  grati- 
fication and  common  interest. 

The  operations  of  the  Clearing  House  were  carried 
on  for  nearly  one  year  without  a  Constitution.  Some 
opposition  was  manifested,  on  the  ground  that  it  was 
not  needed,  and  might  favor  a  dangerous  concentra- 
tion of  power  in  the  hands  of  a  few  managers ;  but 
the  necessity  of  fixed  rules  soon  became  apparent, 
and  the  following  Constitution,  prepared  by  George 
Curtis,  Esq.,  was  adopted  on  6th  of  June,  1854  : 

constitution. 

§  1.  The  name  of  this  Association  shall  be,  "  The 
New  York  Clearing  House  Association." 

§  2.  The  objects  of  the  Association  shall  be,  the  eflec- 
ting  at  one  place  of  the  daily  exchanges  between  the 
several  Associated  Banks,  and  the  payment  at  the  same 
place  of  the  balances  resulting  from  such  exchanges. 
But  the  Association  shall  be  in  nowise  responsible  in 
regard  to  such  exchanges,  nor  in  regard  to  the  bal- 
ances resulting  therefrom,  except  so  far  as  such 
balances  shall  be  actually  paid  into  the  hands  of  the 
Manager.  The  responsibility  of  the  Association  is 
strictly  limited  to  the  faithful  distribution  by  the 
Manager  among  the  Creditor  Banks,  for  the  time 
being,  of  the  sums  actually  received  by  him ;  and 
should  any  loss  occur  whilst  the  said  balances  are  in 
the  custody  of  the  Manager,  they  shall  be  borne  and 


CONSTITUTION.  297 

paid  by  the  Associated  Banks,  in  the  same  proportion 
as  the  other  expenses  of  the  Clearing  House,  as  here- 
inafter provided  for. 

§  3.  The  Association  at  present  consists  of  the  fol- 
lowing Members  :     [The  same  as  the  Proof-lists.] 

§  4.  Each  Bank  belonging  to  the  Association  shall 
be  represented  at  all  meetings  thereof,  by  one  or 
more  of  its  principal  officers,  and  shall  be  entitled  to 
one  vote. 

§  5.  A  general  meeting  of  the  Association  shall  be 
holden  at  the  Clearing  House,  on  the  first  Tuesday  in 
October,  in  each  year,  at  12  o'clock,  M.  At  every 
annual  meeting,  a  Chairman  shall  be  elected,  by  bal- 
lot, to  preside  at  that  meeting,  and  all  subsequent 
meetings  during  the  year,  whenever  he  shall  be 
absent,  a  Chairman  'pro  tern,  shall  be  appointed.  At 
the  same  meeting,  a  Secretary  shall  also  be  elected 
by  ballot.  ' 

§  6.  Special  meetings  shall  be  called  by  the  Clear- 
ing House  Committee  whenever  they  may  deem  it 
expedient,  or  whenever  they  shall  be  thereto  requested 
by  any  seven  of  the  Associated  Banks. 

§  7.  At  all  meetings  of  the  Association,  a  quorum 
for  the  transaction  of  business  shall  consist  of  a 
majority  of  the  whole  number  of  Associated  Banks. 

§  8.  At  every  annual  meeting,  a  Standing  Com- 
mittee of  Five  Bank  Officers  shall  be  elected  by  the 
majority  and  by  ballot,  to  be  called  the  Clearing 
House  Committee,  whose  duty  it  shall  be  to  procure, 
from  time  to  time,  a  suitable  room  or  rooms  for  the 
Clearing  House  ;  to  provide  proper  books,  stationery, 
furniture,  fuel,  and  whatever  else  may  be  necessary 
for  the  convenient  transaction  of  business  thereat ;  to 
appoint  a  Manager  annually,  and  such  Clerks  as  may 
be  necessary  ;  to  establish  rules  and  regulations  to  be 
observed  at  the  Clearing  House  in  cases  not  provided 
for  in  this  Constitution,  subject  to  the  approval  of  the 
Association  ;  and  generally  to  supervise  the  Clearing 
House  affairs.     This  Committee  shall  have  charge  of 

13* 


298  THE   NEW    YORK    CLEAKING    HOUBE. 

the  funds  belonging  to  the  Association  ;  shall  draw 
on  each  Bank  for  its  quota  of  the  expenses  ;  and  shall 
also,  at  the  first  meeting  of  the  Association  after  their 
election,  submit  detailed  estimates  of  the  expenditures 
that  will  be  required  for  the  Clearing  House  during 
the  current  year. 

§  9.  The  salary  of  the  Manager  shall  always  be 
fixed  by  the  Association.  The  salaries  of  the  Clerks 
shall  be  fixed  by  the  Clearing  House  Committee. 
The  Manager  shall  give  a  bond,  with  sureties  in  the 
sum  of  ten  thousand  dollars,  and  each  Clerk  in  the 
sum  of  five  thousand  dollars,  to  be  approved  by  said 
Committee. 

§  10.  The  Manager,  under  control  of  the  Clearing 
House  Committee,  shall  have  immediate  charge  of  all 
business  at  the  Clearing  House,  so  far  as  relates  to  the 
manner  in  which  it  shall  be  transacted ;  and  the 
Clerks  of  the  establishment,  as  well  as  the  Settling 
Clerks  and  Porters  of  the  several  Associated  Banks, 
while  at  the  Clearing  House,  shall  be  imder  his  direc- 
tion. 

§  11.  The  Clearing  House  Committee  shall  have 
power  to  remove  the  Manager,  or  any  of  the  Clerks, 
whenever,  in  the  opinion  of  the  Committee,  the  inter- 
est of  the  Association  shall  require. 

§  12.  The  hour  for  making  exchanges  at  the  Clear- 
ing House  shall  be  10  o'clock  A.  M.,  precisely.  At 
one  o'clock  P.  M.,  the  Debtor  Banks  shall  pay  to  the 
Manager,  at  the  Clearing  House,  the  balances  against 
them,  either  in  actual  coin,  or  in  the  certificates  here- 
inafter mentioned,  except  fractional  amounts.  At 
li  o'clock  P.  M.,  the  Creditor  Banks  shall  receive 
from  the  Manager,  at  the  same  place,  the  respective 
balances  due  to  them,  provided  the  balances  due  from 
the  Debtor  Banks  shall  then  have  been  paid. 

§  13.  Should  any  one  of  the  Associated  Banks  fail 
to  appear  at  the  Clearing  House  at  the  proper  hour, 
prepared  to  pay  the  balance  against  it,  the  amount  of 
that  balance  shall  be  immediately  furnished  to  the 


CONSTITUTION.  299 

Clearing  House  by  the  several  Banks  exchanging  at 
that  establishment  with  the  defaulting  Bank,  in  pro- 
portion to  their  respective  balances  against  that  Bank 
resulting  from  the  exchanges  of  the  day ;  and  the 
Manager  shall  make  requisitions  accordingly,  so  that 
the  general  settlement  may  be  accomplished  with  as 
little  delay  as  possible.  The  respective  amounts  so 
furnished  the  Clearing  House,  on  account  of  the 
defaulting  Bank,  will,  of  course,  constitute  claims  on 
the  part  of  the  several  responding  Banks  against  that 
Bank :  but,  as  before  stated,  the  Association  shall  in 
nowise  be  responsible  therefor. 

§  14.  Errors  in  the  exchanges,  and  claims  arising 
from  the  return  of  checks,  or  from  any  other  cause, 
are  to  be  adjusted  directly  between  the  Banks  who 
are  parties  to  them,  and  not  through  the  Clearing 
House,  the  Association  being  in  no  way  responsible 
in  respect  to  them. 

§  15.  Reclamations  for  errors  and  deficiencies  in 
specie  received  at  the  Clearing  House,  contained  in 
bags  or  other  packages,  sealed  and  marked  in  con- 
formity with  any  rules  established  upon  that  subject 
by  the  Clearing  House  Committee,  should  be  made 
within  a  reasonable  time  by  the  receiving  Bank 
directly  against  the  Bank  whose  mark  the  sealed  bag 
or  package  bears,  the  Association  not  being  responsi- 
ble for  the  contents  of  such  sealed  bags  or  other 
packages. 

§  16.  The  Associated  Banks  shall,  from  time  to 
time,  appoint  one  of  their  own  number  to  be  a  Depos- 
itory to  receive,  in  special  trust,  such  coin  as  any  of 
the  Associated  Banks  may  choose  to  send  to  it  for 
safe  keeping.  The  Depository  shall  issue  certificates 
in  exchange  for  such  coin,  in  proper  form,  and  for 
convenient  amounts.  Such  certificates  shall  be  nego- 
tiable only  among  the  Associated  Banks,  and  shall  be 
received  by  them  in  payment  of  balances  at  the 
Clearing  House.  Such  special  deposits  of  coin  are  to 
be  entirely  voluntary,  each  Bank  being  left  perfectly 


300  THE   NEW    TOKK   CLEANING    HOUSE. 

free  to  make  them  or  not,  at  its  own  discretion.  The 
coin  thus  placed  in  special  deposit  is  to  be  the  abso- 
lute property  of  such  of  the  Associated  Banks  as 
shall,  from  time  to  time,  be  the  holders  of  the  certifi- 
cates, and  is  to  be  held  by  the  Depository,  subject  to 
withdrawal,  on  the  presentation  of  the  proper  certifi- 
cates, at  any  time  during  banking  hours. 

§  17.  New  members  may  be  admitted  into  the 
Association  at  any  meeting  thereof.  Such  new  mem- 
bers shall  pay  an  admission  fee  of  one  thousand  dol- 
lars, and  shall  signify  their  assent  to  this  Constitution, 
in  the  same  manner  as  the  original  members.  But  no 
new  member  shall  be  admitted  except  by  a  vote  of 
three-fourths  of  those  present. 

§  18.  A  Standing  Committee  of  Five  Bank  Offi- 
cers shall  be  appointed  at  every  annual  meeting,  to 
whom  all  applications  for  admission  into  the  Associa- 
tion shall  be  referred  for  examination. 

§  19.  For  cause  deemed  sufficient  by  the  Asso- 
ciated Banks,  at  any  meeting  thereof,  any  Bank  may 
be  expelled  from  the  Association,  and  debarred  from 
all  the  privileges  of  the  Clearing  House,  provided  a 
majority  of  the  whole  number  of  Associated  Banks 
vote  in  favor  thereof. 

§  20.  A  Standing  Committee  of  Five  Officers  of 
Banks  shall  be  elected  at  avery  annual  meeting,  who, 
acting  in  concurrence  with  the  Clearing  House  Com- 
mittee, shall  have  power,  in  case  of  extreme  emer- 
gency, to  suspend  any  Bank  from  the  privileges  of 
the  Clearing  House  until  the  pleasure  of  the  Associa- 
tion thereupon  shall  be  ascertained.  But  no  such 
suspension  shall  take  place,  .unless  a  majority,  at 
least,  of  each  of  these  two  Committees,  shall  be  pre- 
sent at  the  ordering  thereof,  nor  unless  the  vote  be 
unanimous.  In  case  of  such  suspension,  the  Clearing 
House  Committee  shall  forthwith  call  a  general  meet- 
ing of  the  Association,  to  take  the  matter  into  con- 
sideration. 

§  21.  Any  member  of  the  Association  may  with- 


CONSTITUTION.  301 

draw  thereirom  at  pleasure,  first  paying  its  due 
proportion  of  all  expenses  incurred,  and  signifying  its 
intention  to  withdraw,  to  the  Clearing  House  Com- 
mittee. 

§  22.  The  expenses  of  the  Clearing  House,  not 
including  the  expense  of  printing  for  the  several 
Banks  (which  last-mentioned  expense  shall  be  appor- 
tioned equally),  shall  be  borne  and  paid  by  the  sev- 
eral Banks  belonging  to  the  Association,  according  to 
their  respective  capitals,  as  follows  : 

Banks  having  capitals  of  less  than  $500,000,  shall 
pay  $100  each,  annually. 

Banks  having  capitals  of  less  than  $1,000,000,  and 
not  less  than  $500,000,  shall  pay  $200  each,  annually. 

Banks  having  capitals  of  $1,000,000,  and  over,  shall 
shall  pay  $300  each,  annually. 

And  in  the  same  proportion,  if  more  funds  become 
necessary. 

§  23.  This  Constitution,  when  agreed  to  by  the 
Association,  at  any  general  meeting  thereof,  by  a 
majority  of  votes,  shall  be  submitted  to  the  respective 
Boards  of  Directors  of  the  several  Banks  herein 
named  as  members  of  the  Association,  for  their  adop- 
tion. When  adopted  by  a  majority  of  the  whole 
number  of  Banks,  it  shall  be  deemed  and  taken  to  be 
in  full  force  and  operation.  Adoption  shall  be  signi- 
fied by  the  signature  of  the  proper  ofiicer  of  the  Bank 
to  two  copies  hereof — one  to  be  kept  by  the  Chair- 
man of  the  Clearing  House  Committee,  and  the  other 
by  the  Secretary  of  the  Association.  A  copy  of  the 
vote  or  resolution  of  the  Board,  authorizing  such  sig- 
nature, shall  be  deposited  with  the  Secretary.  Such 
Banks  as  shall  not  adopt  this  Constitution  within  two 
months  from  the  time  it  is  agreed  to  in  general  meet- 
ing, as  above  mentioned,  shall,  at  the  expiration  of 
such  two  months,  cease  to  be  members  of  the  Associa- 
tion, provided  the  Constitution  shall  then  be  in  ope- 
ration. 

§  24.  Amendments  of  this  Constitution  may  be 


302  THE   NEW   TOEK   CLEARING   HOUSE. 

made  at  any  meeting  of  the  Association,  by  the  vote 
of  a  majority  of  all  the  members  thereof,  notice  of  the 
proposed  amendments  having  been  given  at  a  pre- 
vious meeting. 


The  following  amendments,  proposed  by  George 
Curtis,  Esq.,  January  11,  1855,  were  subsequently 
adopted : 

§  At  every  annual  meeting,  a  Standing  Commit- 
tee of  Five  Bank  Officers  shall  be  appointed,  to  be 
called  the  Committee  of  Arbitration,  whose  duty  it 
shall  be,  to  hear  and  determine  all  disputes  that 
may  be  submitted  to  them  by  both  parties  thereto ; 
any  member  of  the  Association  being  one:  such 
Committee  shall  record  a  brief  abstract  of  each  case 
referred  to  them,  together  with  their  decision  therein, 
in  a  book  to  be  provided  for  that  purpose,  which 
book  shall  be  kept  at  the  Clearing  House,  open  to 
the  inspection  of  all  members  of  the  Association. 
The  first  Committee  shall  be  appointed  immediately 
upon  the  adoption  of  this  amendment,  and  shall  serve 
until  the  next  annual  meeting. 

§  Whenever  exchanges  shall  have  been  made  at 
the  Clearing  House,  by  previous  arrangement  be- 
tween members  of  the  Association  through  one  of 
their  own  number,  and  Banks  in  the  city  and  vicinity 
who  are  not  members,  the  Eeceiving  Bank  at  the 
Clearing  House  shall  in  no  case  discontinue  the 
arrangement  without  giving  previous  notice,  which 
notice  shall  not  take  effect  until  the  exchanges  of  the 
morning  following  the  receipt  of  such  notice  shall 
have  been  completed. 


DIAGRAM.  303 


THE   CLEARING   HOUSE   BOOMS. 

The  opposite  diagram  represents  the  ground  plan 
of  the  rooms  of  the  Clearing  House  Association. 
They  occupy  the  fourth  floor  of  the  new  building 
recently  erected  by  the  Bank  of  New  York  on  the 
north-east  corner  of  Wall  and  William  streets. 

The  Manager's  Room  has  a  front  of  thirty-six  feet  on 
Wall  street,  and  is  twenty-four  feet  in  depth.  It  has 
a  slightly  raised  platform  at  E,  with  a  desk  and  chair, 
suited  for  the  occupancy  of  the  President  in  the  meet- 
ings of  the  Association. 

D  is  a  solid  centre  table,  onwhich  are  usually  kept 
flies  of  the  daily  papers  and  flnancial  periodicals. 
The  Ledgers  are  laid  upon  it  for  examination  by  the 
members. 

C  is  the  Manager's  desk,  facing  the  middle  of  the 
room.  A  book-case  with  the  nucleus  of  a  flnancial 
library  stands  against  the  northern  wall.  The  apart- 
ment is  carpeted,  and  every  arrangement  speaks  of 
taste,  order  and  discipline. 

A  door  near  Wilham  street  communicates  with  the 
Clerks'  Room,  twenty-four  feet  by  seventeen  feet  in 
size,  neatly  furnished  with  desks  and  drawers  for  the 
books  and  papers.  B,  in  this  room,  is  the  settling 
counter  at  which  the  Bank  messengers  transact  their 
business.  On  one  end  of  it  is  placed  the  Specie  Clerks' 
Receipt  Book  for  balances  paid  to  them.  An  iron 
railing  and  wire  net-w^ork  protects  the  other  part  from 
intrusion  by  visitors.     The  vestibule  on  the  outside. 


304  THE   NEW    YORK   CLEARING    HOUSE. 

at  the  head  of  the  stairway,  communicates  with  the 
Manager's  Room  on  one  side,  and  the  Exchange  Room 
on  the  other. 

The  Exchange  Room  is  eighty  feet  long  by  twenty- 
four  feet  wide.  It  is  well  lighted  on  both  sides ;  that 
opposite  to  the  street  looking  out  into  a  spacious  area 
with  a  glass  roof,  which  ventilates  the  building.  The 
black  spots  inside  of  the  counter,  on  which  the  desks 
are  placed,  represent  stools  for  the  use  of  the  Settling 
Clerks.  The  desks  are  numbered  from  one  to  fifty- 
four,  beginning  at  the  left  hand  of  the  entrance.  The 
name,  also,  of  each  bank  is  engraved  on  a  plate  on  the 
outside. 

A  is  the  Manager's  pulpit,  in  a  raised  doorway 
which  opens  from  the  Clerks'  apartment,  and  over- 
looks the  Exchange  Room.  The  floor  of  this  room  is 
covered  with  a  stout  rug,  to  deaden  the  noise  of  feet 
while  the  Clerks  are  in  movement. 

The  desks  on  the  counter  are  separated  by  a  light 
iron  railing,  and  each  one  is  furnished  with  pigeon- 
holes and' drawers  for  the  necessary  papers  and  imple- 
ments of  writing.  Closets  under  the  counter  aiford 
convenience  for  hats,  coats,  &c. 

THE   DAILY   ROUTINE. 

Each  bank  sends  to  the  Clearing  House  a  mes- 
senger or  Specie  Cleric^  and  a  Settling  Clerk;  the 
former  to  distribute  the  packets  of  money  of  which 
his  exchange  is  composed,  and  the  latter  to  receive 
the  return  packets  from  the  other  messengers.  They 
begin  to   arrive   about    fifteen   minutes  before  ten 


THE    DAILY    KOUTINE. 


305 


o'clock,  A.  M.,  that  being  the  hour  at  which  the  Man- 
ager gives  the  signal  for  the  distribution  to  begin. 

Each  Specie  Clerk  leaves  at  the  settling-desk  B,  as 
he  passes  into  the  long  room,  a  printed  form,  the  blank 
of  which  is  filled  with  the  gross  amount  of  money 
that  he  has  brought  to  exchange.  For  example,  the 
Clerk  of  the  Bank  of  New  York  leaves  the  following : 


m.  1.] 


New  Yoke  Clearing  House, 
March  20th,   1857. 


Credit  BANK  OF  NEW  YORK,   (0 § ^2 ,^ 3 P .'Z P 


.Settling  Clerk. 


The  Assistant  Manager  is  thus  furnished  with  the 
amounts  composing  the  right-hand  main  column  of 
the  Clearing  House  Proof  (page  310),  which  he 
transcribes  under  the  head  of  "  Banks  Cr.,"  and  adds 
together,  making  in  the  example  $40,515,703.66. 
This  is  the  total  sum  sent  in  by  all  the  banks,  and  it 
is  called  the  Credit  Exchange.  If  each  Messenger  has 
a  packet  of  money  for  every  bank  in  the  House 
(excepting  his  own),  there  are  of  course  twenty-five 
hundred  and  fifty  packets  to  be  distributed.  The 
manner  of  efiecting  this  distribution  is  the  distinctive 
feature  of  the  Clearing  House  system,  as  compared 
with  the  old  plan  of  separate  exchange. 


306  THE   NEW   YORK   CLEARING   HOUSE. 

The  Manager  appears  on  his  stand  under  the  door- 
way (A)  at  two  or  three  minutes  before  ten  o'clock, 
and  giving  a  stroke  on  his  bell,  calls  out :  "  Take  your 
places." 

The  Settling  Clerks  immediately  occupy  their 
respective  desks  on  the  inside  of  the  counter,  and  tlie 
Specie  Clerks,  standing,  on  the  outside.  Each  of  the 
latter  carries  on  his  left  arm  an  open  box  of  some 
light  material,  containing  his  packets  of  money 
arranged  in  the  consecutive  desk-order  for  delivery 
as  he  passes  round  the  counter.  He  has  also  a 
Eeceipt  List,*  called  "The  Specie  Clerks'  Statement," 
with  the  amount  designed  for  each  bank,  set  down  in 
the  same  order. 

A  fine  is  imposed  for  absence  or  late  attendance. 

There  are  now  in  the  room  one  hundred  and  two 
Clerks,  besides  those  who  are  attached  to  the  House, 
and  the  scene  is  not  always  free  from  confusion  by 
loud  conversation,  which  the  Manager  corrects  by  a 
call : 

"  Order,  gentlemen,  order !" 

Occasionally  there  are  notices  to  be  given  of  change 
of  rules,  or  other  matter  relating  to  the  business.  The 
Manager  calls  the  attention  of  the  Clerks  to  any  vio- 
lation of  rules  that  may  have  come  to  his  knowledge, 
and  perhaps  enforces  in  a  few  words  the  necessity  of 
strict  discipline.  Some  one  bank  may  have  a  com- 
munication on  a  subject  of  common  interest.  A  dis- 
crepancy in  the  cash  of  any  one,  on  a  previous  date, 


*  This  is  a  copy  of  the  Receiving  Teller's  Proof  List,  with  a  blank  column  for 
the  Settling  Clerks  to  sign  their  initials  as  a  receipt. 


The  Manager  in  his  Pulpit 


THE   DAILY    KOUTINE.  307 

is  notified,  and  perhaps  discovered  by  a  corresponding 
error  in  some  other.  New  counterfeits  or  altered 
bills  may  be  reported. 

When  the  minute-hand  of  the  clock  reaches  the 
stroke  of  ten,  a  second  ring  of  the  Manager's  bell 
gives  the  signal  for  the  distribution  of  the  exchanges 
to  begin. 

Each  Specie  Clerk  advances  one  step  forward„and 
is  brought  opposite  to  the  first  desk,  at  which  his 
delivery  is  to  be  made.  He  hands  over  the  packet 
of  money  designed  for  it,  and  also  the  "  Statement," 
on  which  the  Settliug  Clerk  writes  his  initials  against 
the  amount  as  a  receipt,  being  careful  to  observe  that 
the  record  is  correct.  The  Statement  is  then  returned 
to  the  Specie  Clerk,  who  goes  through  the  delivery 
at  each  desk  in  like  manner.  The  whole  line  ad- 
vances at  the  same  time,  resembling  in  its  movement 
a  military  company  in  lock-step.  While  this  is  going 
on,  the  Manager  walks  round  the  interior  of  the  desks, 
and  silently  identifies  every  Specie  Clerk  with  the 
bank  which  he  represents.  It  is  rarely  that  a  sub- 
stitute is  employed  in  this  service  ;  and  if  not  already 
known  to  the  Manager,  he  must  be  ofiicially  intro- 
duced. 

In  about  six  minutes  the  circuit  is  made,  bringing 
each  Messenger  round  to  the  starting-point,  opposite 
his  own  desk.  His  Statement,  signed  by  every  Set- 
tling Clerk,  is  the  voucher  to  his  bank  that  he  has 
delivered  all  the  money  intrusted  to  his  care. 

There  is  no  part  of  the  Clearing  House  routine  that 
exhibits  such  striking  results  in  economy  and  safety, 
compared  with  the  old  plan  of  exchange,  as  this  move- 


808  THE   NEW   YORK   CLEAKING   HOUSE. 

ment  of  six  minutes.  Two  thousand  five  hundred  and 
fifty  packages  of  money  have  been  distributed  and 
receipted  for  in  this  short  space  of  time,  by  a  method 
that  excludes  almost  the  last  possibility  of  loss  or 
error.  The  same  work,  on  the  old  plan,  occupied 
each  messenger  an  average  of  not  less  than  two  hours, 
and  was  attended  by  great  exposure  in  passing 
through  jostling  streets  from  one  bank  to  another. 
Supposing  the  whole  service  to  be  performed  by  one 
person,  the  relative  time  occupied  would  be  as  five 
hours  is  to  eight  days  of  twelve  hours  each,  or  a  clean 
saving  of  ninety-seven  out  of  one  hundred  and  two 
hours ! 

Each  Settling  Clerk  has  now  on  his  desk  the  packets 
of  money  which  constitute  his  Debit  Exchange.  He 
copies  them  in  his  Statement,*  under  the  head  of 
"  Banks  Cr.,"  and  the  accuracy  of  the  copy  is  tested 
by  the  Specie  Clerks  calling  back  the  amounts  from 
the  packets.  The  footing  of  this  column  furnishes 
the  debit  of  his  bank  in  the  Clearing  House  Proof. 

The  Specie  Clerks  are  now  at  liberty  to  leave  the 
House  with  their  return  exchanges,  which  they  do 
generally  within  fifteen  minutes  of  the  time  that  the 
distribution  begins;  and  although  not  able  to  state 
the  precise  balance  of  their  banks  with  the  House, 
they  can  report  it  in  round  numbers.  The  Settling 
Clerks  are  obliged  to  remain  until  the  Manager 
announces  an  exact  proof. 


*  "The  Settling  Clerks'  Statement"  is  the  original  of  the  "Specie  Clerks'  State- 
ment," ivith  a  blank  column  in  which  to  copy  the  return  exchange ;  and  when 
complete,  the  difference  between  the  two  columns  is  the  debit  or  credit  balance 
for  the  day. 


THE   DAILY   ROUTINE.  309 

The  rapidity  and  accuracy  with  which  the  more 
skillful  of  the  Settling  Clerks  accomplish  their  work, 
is  almost  incredible.  The  distribution  occupies  six 
minutes.  At  the  end  of  two  minutes  more,  they  have 
copied  and  footed  their  column.  But  they  must  then 
make  a  deliberate  revision  of  it,  to  be  assured  against 
errors. 

The  two  footings  of  the  Settling  Clerks'  Statement, 
and  their  difference,  debit  or  credit,  are  written  in  the 
following  form,  which  is  sent  to  the  Assistant  Manager, 
to  make  up  "  the  Clearing  House  Proof"  (page  310). 

The  examples  given  will  enable  the  reader  to  trace 
the  figures  in  the  course  of  their  transfer. 


No.  1.]  New  York  Clearing  House. 

March  20th,  1857. 

Debit  BANK  OF  NEW  YORK,  Am't  received,  $7  80,07  0.7  6 
Credit       "       "        "  "  "      brought,  $842,539.19 


$ Debit  balance  due  Clearing  House, 

Credit  balance  due  BANK  OF  NEW  YORK $62,468.43 


.Settling  Clerk. 


While  the  Proof  is  in  preparation  from  these  forms, 
the  Settling  Clerk  of  each  bank  fills  up  a  set  of  blanks 
with  the  amount  credited  on  his  list  from  every  other. 
For  example,  the  Clerk  of  the  Bank  of  ^ew  Tork 
sends  to  the  Clerk  of  the  Manhattan  Bank  the 
following : 


310 


THE   NEW   YORK   CLEARING   nOUSE, 


a  Xj  :e:  A.  Ti  X  1ST  o- 


March  20th,  1857. 


No. 


Banes. 


Bank  of  New  York 

Manhattan  Company. . . . 

Merchants' 

Mechanics' 

Union 

Bank  of  America 

Phenix 

City 

North  River 

Tradesmen's 

Fulton 

Chemical 

jMerchants'  Exchange... 

[National 

Butchers'  &  Drovers' 

iMechanics'  &  Traders'... 

Greenwich 

Leather  Manufacturers'. 

iSeventh  Ward 

Bk.  of  theStateofN.  Y. 

American  Exchange 

Mech.  Banking  Assoc'n . . 

Bank  of  Commerce 

Bowery 

Broadway 

Ocean 

Mercantile 

Pacific 

Bank  of  the  Republic. . . 

Chatham 

People's 

Bank  of  North  America. 

Hanover 

Irving 

Metropolitan 

Citizens' 

Grocers' 

[Nassau 

East  River 

[Market 

Saint  Nicholas 

Shoe  and  Leather 

Corn  Exchange 

Continental 

Bank  of  Commonwealth 

Oriental 

Marine 

Atlantic 

Importers'  &,  Traders' 

Park 

Artisans' 


Balances 
due  to 
Clearing 
House. 


179476.36' 

12929143' 

285,304  33 


86502 


217 


587 


626 


853 


951 143: 
525  52; 


2  205  25 
97,302  911 


17i01911 


8451,80 


IO3597I02 

249835 

63  02o!44 

50:721|86: 


21|788,70' 
47,839'S9 


Banks   Dr. 


.780 
1198 
8484 

1:592 

2813 
2  600 
115 
580 
172 
104 
241 
197 
410 
452 
129 

41 

.35 
991 
180 
893 
076 
247 
272 

72 
218 
384 
446 

92 
352 

79 

94 
686 
352 
117 
760 

88 
112 
.331 

52 
207 
295 
366 
li038 
1390 
847 

33 
890 
247 
310 
579 


07076 

41296 
09194 
99222 
02377 
23  63 
098[42 
666  50 
720  94 
139,73 
71785' 
007  27' 
63222; 
99422 
719175 
182,48i 
404!..  I 
464  07 
.572  37 
899  27 
473'27 
58906 
050  33 
330  86, 
402!41 
639;77 
973  09 
845  83 
505  03 
367  [82 
507  !05 
922  86 
852'64[ 
44273 
562  96 
984  55' 
690.:88| 
872;  15j 
99692! 
14325! 
366  851 
901!  55 
323  69 


624146 

850  08 


Banks  Cr. 


. .  842 
1377 
3782 
1413 
2800 
2  315 


53919 

768  55 
778  77 
515;S6 
094  34 


41930 
51535 
16437 

288!59 

107179184 

254  445,12 

197181647 

.526873J22 

418:776'26 

13]|771i66 

29.^9525 

378S2i56 

053  650  08 

248  7701.. 

035962'93 

3109168^27 

, .  254  257i05 

2  977|428:34 

,.    77,006[08 

, .  213 .549  39 

.  358'516'63 

.  579jl07|92 

.    90894!40 

187i979  51 


80167 
96111 
724  620 
420800 
115237 
663260 
101804 
112'692 
814853 
57328 
198691 
345928 


199992 
360  601 
658471 


1444*419  79  40615703'66  4o'515lr03  66  1444'419  79 


Balances 
due  to 
Banks. 


62'46848 
179  855;59 
248  68688 


18416  98 


23  562,65 
3  65211 

12,727,27 
, . . .  809  20 
1161241 


2:051  91 


2147856 

62186  01 

63 197  68 

142  063  66 

82695  . . 

6:667  99 


4  675  72 


23,976  86 
132'134  88 


. . .  |799  81 

1' 604  71 

37J697  92 

6844788 


12 

819  62 
170 

4 

331  96 

50 

55654 

1 

1 

7 

013  29 

1 

49  977  02 
73  621  66 


THE   DAILY   KOUTINE.  311 


JSTo.  2. 
]vi:.A.]sria:-A.TT-A.]sr    ooi^^Ei>-A.zsr~5r 

From  No.  1, 

BANK  OF  NEW  YOEK. 


^^^JSS.^O. 


The  words :  "From  No.  1,  Bank  of  New  York,"  run 
through  the  whole  set ;  and  in  like  manner,  the  num- 
ber and  name  of  each  bank  runs  through  the  set 
belonging  to  it.  The  other  number  and  name  is  the 
address  of  the  particular  bank  to  which  the  ticket  is 
sent. 

This  ticket  ought  to  correct  all  errors  of  transcrip- 
tion, although  the  money  has  been  carried  away.  It 
is  to  be  remembered  that  the  Specie  Clerks'  Statement 
is  a  transcript  of  the  "total  debit"  column  in  the 
Settling  Clerks'  Statement.  If  any  Settling  Clerk 
copies  a  wrong  amount  from  his  list  in  one  of  these 
tickets,  the  Clerk,  to  whom  it  is  sent,  discovers  the 
mistake  by  comparison  with  the  original  Statement 
in  his  hands.  So  perfect  is  this  plan  of  direct  and 
alternate  revision,  that  the  Clearing  House  Exchanges 
have  been  made  for  nearly  five  years  without  the 
error  of  a  single  cent. 

If  no  mistake  is  made,  the  Assistant  Manager  an- 
nounces a  proof  in  thirty  minutes  from  the  beginning 
of  the  movement.     But  the  first  trial  is  rarely  so 


312  THE   NEW   YORK   CLEARING   HOUSE. 

fortunate.  Fifty-one  clerks  make  over  twenty  thou- 
sand figures  in  less  than  ten  minutes,  and  a  single  one 
faulty  or  obscure  vitiates  the  result. 

The  accuracy  of  the  General  Proof  consists  in  the 
agreement  of  the  debit  and  credit  columns  with  each 
other,  and  in  that  of  the  balance  columns.  Such  is 
the  regularity  and  discipline  of  the  House,  that  the 
Assistant  Manager  seldom  varies  a  minute  from  the 
half-liour  in  announcing  his  first  trial. 

"The  difference  is  $7,643.22 "—or  it  may  be  but  a 
few  cents. 

The  writing  and  distribution  of  the  small  tickets 
has  been  going  on  in  the  meantime,  and  it  frequently 
happens  that  the  error  is  discovered  almost  simulta- 
neously with  its  announcement.  At  other  times,  the 
whole  corps  of  Settling  Clerks  may  be  detained  an 
hour  or  more  by  further  revision. 

If  the  tickets  fail  to  expose  an  error  promptly,  the 
Manager  requires  the  Clerk  at  either  end  to  pass  down 
the  line  with  his  Statement,  whilst  the  others  call 
back,  each  the  amount  charged  as  delivered  by  the 
Specie  Clerk.  The  second  Clerk  follows  the  track  of 
the  first,  and  the  third  that  of  the  second,  as  they 
successively  pass.  This  is  the  final  method  of  revi- 
sion ;  and  if  the  additions  are  correct,  it  must  make 
the  proof. 

Errors  discovered  within  forty-five  minutes  from  the 
beginning  of  the  distribution  incur  no  penalty ;  but 
after  that,  they  are  chargeable  with  a  fine,  payable 
by  the  bank  in  whose  figures  they  occur.  The  banks 
are  therefore  careful  to  send  accurate  and  skillful 
clerks.     It  is,  moreover,  a  matter  of  pride  and  econ- 


THE   DAILY    ROUTINE.  313 

omy  with  themselves  to  avoid  errors,  as  they  involve 
detention  from  home  duties. 

SCALE   OF   FINES. 

For  all  errors  remaining  uncorrected  at  the  expiration  of  one  hour 
and  a  quarter  from  commencing,  the  Fines  in  this  list  will  be  doubled — 
and  at  the  expiration  of  two  hours,  the  Fines  will  be  quadrupled. 

1st — All  errors  on  the  Credit  side  of  the 
Settling  Clerk's  Statement  (^.  e.  in  the 
amount  brought)  whether  of  footing  or 
entry,  and  all  errors  causing  disagree- 
ment between  the  credit  entries,  the 
check  tickets,  and  the  exchange  slips — 
each .     .     .   $3.00 

2d — Errors  in  making  the  Debit  (*'.  e.  amount 

received)  entries — each 2  00 

3d — ^Errors  in  the  Tickets  reported  to  the  Clear- 
ing House,  causing  disagreement  be- 
tween the  balances  and  aggregates — 
each 2.00 

4th— All  other  errors— 1.00 

5th — Disorderly  conduct  of  Clerk  or  Porter  at 
the  Clearing  House ;  or  disregard  of  the 
Manager's  instructions — each  offence    .      1.00 

6th — Clerk  or  Porter,  failing  to  attend  punc- 
tually at  the  morning  exchanges — each     2.00 

7th — Debtor  Banks,  failing  to  appear  to  pay 

their  balances  by  1^  o'clock,  P.  M.  .     .      3.00 

The  Clearing  House  Proof  exhibits  in  one  view  the 
total  amount  of  the  exchange,  the  amount  received 
from  each  bank,  the  amount  taken  away  again  by 
each,  and  the  balance  due  to  or  from  each  ;  also  the 
total  balance  of  the  Clearings. 

Up  to  this  point,  the  Clearing  House  has  nothing 
to  do  with  the  money.  Kone  of  its  employes  toucli 
it,  and  neither  does  the  Manager.  It  has  been  during 
14 


314:  THE  NEW   TOKK   CLEAEmO   HOUSE. 

the  whole  process  entirely  within  the  custody  of  the 
Clerks  and  Messengers — the  representatives  of  their 
respective  banks ;  and  every  package  has  been  re- 
ceipted for,  immediately  on  delivery.  The  exchange 
is  effected  independently  of  the  House,  the  authority 
of  the  Manager  being  limited  to  the  preservation  of 
order,  and  to  the  enforcement  of  the  rules  of  the 
Association. 

The  column  on  the  left  hand  of  the  Clearing  House 
Proof  shows  the  balance  due  from  each  debtor  bank 
to  the  House,  which  here  stands  for  all  the  other 
banks  ;  and  that  on  the  right,  the  amount  due  to  each 
creditor  bank  from  all  the  others — both  in  the  aggre- 
gate. This  is  another  remarkable  economy  over  the 
old  system,  by  which  settlement  was  effected  only  by 
the  drawing  of  as  many  different  drafts  as  there  are 
banks.  For  example :  the  balance  of  $179,476.36, 
due  by  the  Mechanics'  Bank  to  the  House,  can  now 
be  paid  in  one  sum,  and  by  coin  certificates,  in  the 
time  necessary  for  a  single  messenger  to  walk  over 
the  ground  between  the  two  places  ;  whereas,  for- 
merly, it  involved  the  drawing  of  a  separate  draft  by 
the  Mechanics'  Bank  for  every  debit  balance,  and  the 
liquidation  of  another  for  every  credit  balance ;  be- 
sides, the  frequent  carriage  of  gold  by  hand  or  in 
carts,  and  the  time  of  one  or  more  messengers  for  the 
entire  day — to  say  nothing  of  the  interdrawing  and 
confusion  growing  out  of  cross-errands  and  disar- 
rangement of  original  balances. 

At  one  o'clock,  the  debtor  banks  begin  to  send  in 
their  balances,  for  which  the  Manager's  receipt  is 
retui'ned : 


Paying  out  a  Ton  of  Gold  in  tlic  old  Clearing  House  on  Broadway. 


THJE   DAILY   ROUTINE.  315 


No.  4.]  New  Yoee:  Cleaking  House. 

Marcln.  20th,  1857. 

Received  from  the  Mechanics'  Bank  One  hundred  and 
seventy-nine  thousand  four  hundred  and  seventy-six  ^^  Dollars, 
in  full  for  balance  due  the  Associated  Banks. 

^/yp^y^'Sd [Signed  by  the  Manager.] 


Each  bank  keeps  a  current  ledger-account  with  the 
House,  charging  it  with  all  money  sent,  and  crediting 
it  with  all  that  is  returned;  and  this  receipt  is 
charged,  as  a  voucher,  on  the  books  of  the  paying 
bank. 

The  Specie  Clerks  of  the  creditor  banks  come  in 
from  half-past  one  to  two  o'clock,  to  get  the  balances 
due  to  them,  for  which  they  give  receipts  in  a  book 
prepared  with  suitable  forms  for  that  purpose.  The 
settlement  is  completed  by  two  o'clock.  It  is  for  this 
period  of  one  hour  only,  that  the  Clearing  House  has 
any  money  in  actual  possession,  and  then  simj)ly  as 
trustee — receiving  from  one  to  pay  to  another. 

Default  in  payment,  on  the  part  of  any  bank,  leads 
to  its  immediate  suspension  from  the  Exchange.  The 
balance  due  from  it  to  the  House  is  assessed  on  the 
other  banks  in  .the  proportion  of  their  respective 
claims  against  the  defaulting  member,  and  the  settle- 
ment is  not  deranged,  so  far  as  the  House  is  con- 
cerned. In  effect,  the  several  claims  revert  to  the 
condition  in  which  they  stood  before  the  exchange 


816  THE  NEW   YOEK   CLEAEINQ   HOUSE. 

was  made,  and  become  open  accounts  between  the 
banks  and  the  defaulting  member,  with  which  the 
Clearing  House  has  thereafter  nothing  to  do.  [See 
section  13  of  the  Constitution,  page  298.] 

The  amount  of  coin  required  in  the  settlement  of 
March  20th,  1857,  when  the  exchanges  were  heavier 
than  on  any  other  day  since  the  establishment  of  the 
Clearing  House,  was  $1,444,419.79 — equal  in  gross 
weight  to  about  three  tons  avoirdupois,  or  six  thou- 
sand five  hundred  pounds,  which  would  make  nearly 
three  hundred  bags  of  gold  of  five  thousand  pounds 
each.  The  daily  movement  of  such  a  weight,  first 
from  the  debtor  banks  to  the  House,  and  thence  to 
the  respective  creditor  banks,  would  be  attended  with 
considerable  expense  and  risk.  To  avoid  this,  the 
Association  constituted  the  Bank  of  America  a  com- 
mon-coin depository,  to  hold  in  "trust,  and  to  issue 
certificates,  for  such  sums  of  gold  as  the  other  banks 
might  j^lace  therein.  The  form  of  the  Certificate  is 
as  follows : 

No.  246.]  New  Yoke,  May  Uh,  1858. 

BANX  OF  AMEKICA.  [$5,000. 

This  certifies  that  the  Bank  of  Nev3  York  has 
deposited  in  this  hank  Five  Thousand  Dollars^  i/n 
coin,  to  he  held  in  trust  as  a  special  deposit,  j>ayable 
in  coin,  on  demand,  to  any  hank  member  of  the  New 
York  Clearing  House  Associatioyi,  only  on  presenta- 
tion of  this  Certificate,  indorsed  hy  the  hank  demand- 
ing payment  of  the  same. 

[Signed  by  the  Ooaliier  and  Ke«elving  Teller  of  the  Bank.] 


TheNew-Fasbioned  Wny  of  Bank  Settlement     The  Specie  Clerk  has  $500,000  of 
Coin  Ceriiticates  in  his  pocket 


THE  DAILY   KOUTINK.  317 

These  certificates  are  issued  for  the  several  amounts 
of  $1,000,  $5,000,  and  $10,000,  in  the  option  of  the 
depositing  bank.  They  are  numbered,  registered, 
and  countersigned  on  the  back,  by  the  General  Book- 
keeper of  the  Bank  of  America.  When  paid  in  at 
the  House,  they  are  indorsed  by  the  paying  bank — 
and  when  paid  out,  charged  to  the  receiving  bank ; 
so  that  they  can  always  be  traced  by  the  records. 
They  are  valid  only  in  the  Clearing  House  settle- 
ments, or  directly  between  the  banks. 

Any  of  the  Associated  Banks  that  may  have  these 
certificates  on  hand,  and  a  deficiency  of  ready  coin, 
can  obtain  the  latter  in  exchange  with  any  other  that 
has  an  excess. 

The  bills  of  the  several  banks  are  admitted  in  settle- 
ment of  balances  under  one  thousand  dollars. 

The  Clearing  House  is  not  responsible  for  any  mis- 
takes, overdrafts,  or  other  irregularities  that  may 
occur  in  the  exchanges.  These  are  corrected  by  the 
banks  between  themselves. 

Reclamations  for  differences,  resulting  from  the 
miscount  of  money,  or  the  omission  of  entries  on 
the  exchange  slips,  have  always  furnished  cause 
for  dispute  between  the  banks.  The  open  exchange 
is  in  the  exclusive  personal  charge  of  the  messen- 
ger, between  the  bank  and  the  Clearing  House, 
either  way.  He  might  abstract  bills  without  being 
discovered.  Claims  for  deficiency  have  frequently 
been  resisted  on  this  ground.  To  remove  it,  some  of 
the  banks  seal  up  their  exchanges  in  large  envelopes, 
and  thus  relieve  the  transit  of  all  suspicion.  For  rea- 
sons not  apparent,  the  practice  is  far  from  general. 


318  THE  NEW  YOEK   CLEAKING  HOUSE. 

The  economy  of  time  and  labor  effected  by  the 
Clearing  House  system  is  stated  by  the  Manager,  Mr. 
George  D.  Lymajst,  in  an  appendix  to  "  Cleveland's 
Banking  Laws  of  New  York,"  as  follows : 

"  On  the  day  when  the  Clearing  House  began 
business,  about  twenty-seven  hundred  open,  active 
accounts  on  the  ledgers  of  the  associated  banks  were 
balanced — the  most  of  them  for  the  first  time,*  and 
all  of  them  finally.  The  business  which  had  rendered 
necessary  this  large  number  of  accounts  was  thence- 
forth accomplished  more  quickly,  with  less  annoyance 
to  bank  ofiicers,  and  with  greater  safety  to  all  con- 
cerned. The  results  may  be  briefly  enumerated  as 
follows : 

'•''First — The  condensation  for  each  bank  of  forty- 
eight  balances  into  one,  and  the  settlement  of  that 
balance  without  a  movement  of  specie. 

"  Secondly — The  avoidance  of  numerous  accounts, 
entries,  and  postings. 

'■''Thirdly — Great  saving  of  time  to  the  Porters,  and 
of  risk  in  making  exchanges  and  settlements  from 
bank  to  bank. 

'-''Fourthly — Eelief  from  a  vast  amount  of  labor  and 
annoyance  to  which  the  great  army  of  Cashiers, 
Tellers,  and  Book-keepers  were  subjected  under  the 
old  system. 

'-''Fifthly — ^The  liberation  of  the  Associated  Banks 
from  all  injurious  dependence  on  each  other. 

'■'■Sixthly — The  absolute  facility  afforded  by  the 
books  of  the  Clearing  House  for  knowing  at  all  times 
the  management  and  standing  of  every  bank  in  the 
Association." 


*  The  practice  of  the  banks  had  been  to  draw  settloment-checks  on  each  other 
for  even  thousands  of  dollars  near  the  balance  due,  and  the  account  was  never  settled 
to  a  point.   The  accuracy  thereof  was  frequently  tested  by  comparison  of  the  books. 


THE  CLEAEING  nOUSE  KECOKDS.         319 


OF  THE  CLEAEING  HOUSE  EECOEDS. 

The  daily  footings  of  the  General  Proof  are  posted 
to  the  Ledger,  exhibiting  a  continuous  history  of  the 
aggregate  dealings  of  the  banks. 

In  like  manner,  the  daily  debit  and  credit  exchange 
of  each  bank  is  posted  to  its  account,  and  shows  not 
only  the  extent  of  its  business,  but  measurably  its 
character  also.  This  is  the  most  essential  of  all  the 
records.  It  is  that  which  brings  the  banks  separately 
within  the  supervision  and  control  of  the  Clearing 
House — a  necessary  complement  of  the  joint  respon- 
sibility created  by  the  organization. 

The  twentieth  section  of  the  Constitution  empowers 
a  Committee  to  suspend  any  bank  from  the  privileges 
of  the  Clearing  House,  "  in  case  of  extreme  emerg- 
ency." This  emergency  is  indicated  by  the  daily 
course  of  the  exchanges ;  and  there  is  no  possibility  of 
concealing  it.  For  example  :  The  sworn  weekly 
statements  of  a  bank  may  show  that  it  held  up  to  a 
certain  date  an  average  reserve  of  coin  of  three  hun- 
dred thousand  dollars.  The  records  show  that  its  debit 
balances  of  the  three  following  days  reach  that  sum. 
It  must  then  be  entirely  exhausted  of  its  coin.  If,  on 
the  fourth  day,  it  is  again  brought  into  debt  sixty 
thousand  dollars,  it  must  either  borrow  or  buy  coin 
to  pay  it — both  extreme  resorts,  and  hurtful  to  the 
character  of  the  institution.  With  the  knowledge  of 
these  facts,  the  Committee  visit  the  bank,  and  inves- 
tigate its  affairs.  If  they  are  foimd  to  be  hopelessly 
involved,  it  is  suspended  from  the  exchange  at  the 


320  THE  NEW   TOEK   CLEAKING   HOUSE. 

Clearing  House — a  last  blow  to  its  credit.  If,  on  the 
tlie  other  hand,  the  embarrassment  is  temporary,  and 
does  not  impair  the  solvency  of  the  bank,  it  receives 
assistance,  and  is  preserved  in  line.  This  action  of 
the  House  has  been  exemplified  in  several  instances, 
with  most  satisfactory  results.  If  the  restrictive 
power  has  brought  unwisely-expanded,  but  otherwise 
well-conducted  banks  to  the  bar  of  examination,  the 
preservative  power  has  given  relief,  and  saved  them 
from  public  discredit.  K  the  insolvency  of  a  badly- 
conducted  bank  has  been  hastened  by  the  require- 
ment of  prompt  and  full  daily  liquidation,  no  mischief 
or  injustice  has  been  done  thereby ;  and  the  general 
credit  of  our  banking  system  has  been  improved  by 
the  excision  of  a  bad  member. 

A  bank  which  receives  frequent  remittances  of 
specie  from  abroad  is  an  exception  to  the  supposed 
case.  With  such  an  explanation,  its  debit  balances 
at  the  House  may  exceed  its  credit,  without  injury  to 
its  standing. 

A  Summary-book  is  made  up  from  the  daily  post- 
ings, showing  the  total  receipts  and  payments  of  specie 
by  each  bank  for  the  week,  and  also  for  the  month 
and  year.  The  adverse  balances  of  one  period  may 
be  compensated  by  the  favorable  balances  of  the 
succeeding  period ;  and  thus  the  specie  history  of  each, 
and  of  the  whole,  is  followed  up  with  unfailing  preci- 
sion. If,  at  the  end  of  a  month,  it  appears  that  a 
bank  has  paid  in  to  the  House  one  million  of  dollars 
more  than  it  has  received,  and  if  it  has  no  foreign 
sources  of  replenishment,  the  conclusion  is,  that  it  has 
supplied  itself  by  purchase.     If  the  same  result  should 


THE  CLEARING  HOUSE  KECOEDS.         321 

be  shown  at  the  end  of  another  month,  without  signs 
of  recuperation,  and  so  on  continuously,  it  becomes 
evident  that  the  institution  is  carrying  a  forced  aver- 
age of  loans,  and  it  will  receive  a  call  from  the  Com- 
mittee, under  the  twentieth  section  of  the  Constitution. 
But  this  extreme  case  is  most  unlikely  to  happen. 
The  credit  that  every  member  derives  from  the  Asso- 
ciation is  too  valuable  to  be  cast  off  or  treated  with 
lightness.  The  action  of  the  Association  is  too  im- 
partial and  just  to  give  offence,  or  to  admit  excuse 
for  disregarding  its  advice. 

A  positive  principle,  or  rule  of  financial  govern- 
ment, has  been  demonstrated  by  this  action  of  the 
Clearing  House  on  the  city  banks — that  is,  the  restric- 
tion of  loans,  by  the  necessity  of  maintaining  a  cer- 
tain average  of  com  from  resources  within  the  hanh. 
Borrowing  from  day  to  day  will  no  longer  do.  It 
cannot  be  concealed.  The  records  will  show  conclu- 
sively whether  the  average  is  kept  up  by  a  healthy 
business,  or  by  a  forcing  process. 

The  limitation  imposed  does  not  stop  at  the  bank 
loans,  but  passes  through  them  into  the  commercial 
system.  The  loans  rest  on  the  coin  average,  this 
rests  on  the  deposits,  and  the  deposits  rest  on  the 
means  of  trade.  The  Clearing  House  has  not  created 
any  new  dependence  of  this  kind,  but  it  has  brought 
the  facts  into  a  manageable  shape,  and  established 
something  like  an  axiom  in  the  banking  business.  It 
is  not  a  mere  arbitrary  requirement  that  a  specific 
average  of  coin  must  be  maintained,  but  it  is  in  the 
constitution  of  that  average  as  a  result^  and  the  con- 
trol of  it  by  an  organization  which  permits  no  escape. 


322  THE  NEW   TOKK   CLEAKING   HOUSE. 

and  works  no  injustice, — and  what  that  organization 
is  for  the  city  of  New  York,  the  city  is  for  the  country  ; 
a  restrictive  power  over  the  general  currency  of 
trade  must  be  exerted  through  this  channel  to  its 
remotest  sections. 

Each  bank  in  the  city  of  New  York  is  required  by 
law  to  publish,  "  on  the  morning  of  every  Tuesday,  in 
a  newspaper  printed  in  the  said  city,  a  statement 
under  the  oath  of  the  President  or  Cashier,  showing 
the  average  amount  of  loans  and  discounts,  specie, 
deposits,  and  circulation,  for  the  next  preceding  week." 
The  object  of  this  law,  which  went  into  effect  on  the 
1st  of  August  1853  (two  months  before  the  organization 
of  the  Clearing  House),  was  to  check  the  tendency  to 
a  dangerous  expansion  of  bank  loans.  "While  it 
answered  the  purpose  measurably,  it  proved  the 
inadequacy  of  legislative  action  of  itself  to  correct 
the  evil.  The  law  was  satisfied  with  the  publication.^ 
merely,  of  the  statement.  It  neither  imposed  penal- 
ties nor  indicated  any  relation  to  be  preserved  between 
the  amount  of  loans  and  that  of  specie.  It  did  not 
compel  banks  to  liquidate  between  themselves.  A 
bank  might  show  a  creditable  average  of  coin,  whilst 
carrying  a  discreditable  average  of  debt — enough,  if 
paid,  to  exhaust  the  last  dime  in  its  vaults.  In  reality, 
nearly  all  the  force  and  value  of  tlie  "Weekly  State- 
ment is  due  to  its  incorporation  with  the  records  of  the 
Clearing  House.  These  have  given  it  the  stamp  ot 
truth,  which  it  had  not  before.  There  is  no  longer  a 
possibility  of  "  fixing  it  up  "  so  as  to  give  a  false  show 
of  the  condition  of  a  bank.  It  must  tell  "  the  truth, 
the  whole  truth,  and  nothing  but  the  truth." 


THE   CLEAKING   HOUSE   EEC0ED8.  323 

Every  bank  in  the  State  of  New  York  is  required 
by  law  to  publish,  in  a  local  newspaper,  under  the 
oath  of  the  President  and  Cashier,  a  quarterly  state- 
ment of  its  condition,  and  to  transmit  a  manuscript 
and  a  printed  copy  thereof  to  the  Bank  Department 
at  Albany,  where  a  synopsis  of  the  whole  is  prepared 
and  published  by  the  General  Superintendent,  for 
presentation  to  the  Legislature.  The  original  law 
specified  a  certain  day  near  the  end  of  each  quarter, 
on  which  this  statement  should  be  made  up.  It  was 
supposed  that  this  would  be  sufficient  to  restrict  the 
business  of  the  banks  within  safe  limits ;  but  it  proved 
wholly  inefiective.  To  show  how  the  pui-pose  of  the 
law  was  defeated,  the  form  of  a  Quarterly  Statement 
is  given  on  page  324. 

The  date  on  which  the  Statement  was  to  be  called 
for,  being  known,  nothing  was  easier  than  to  prepare 
for  it.  Some  of  the  new  banks  especially,  whose 
loans  were  generally  stretched  beyond  prudence, 
found  it  difficult  to  make  a  creditable  show  by  the 
side  of  the  older  institutions.  Deposits  were  borrowed 
for  a  single  day.  The  loans  to  directors  were  reduced 
for  a  few  hours,  or  jumped  over  by  transit  checks 
through  other  banks.  Any  desirable  changes,  to 
make  a  good  show  out  of  bad  facts,  could  be  carried 
long  enough  for  a  commissioner  to  administer  the 
oath  ;  and  the  purpose  of  the  law  was  so  effectually 
defeated,  in  the  very  spots  where  it  was  chiefly 
intended  to  apply  that  the  Legislature  amended  it  by 
authorizing  the  Superintendent  to  specify,  after  the 
expiration  of  the  quarter,  an  antecedent  date,  under 
which  the  Statement  should  be  made.     But  even  this 


324  -THE   NEW   TOEK   CLEABLNG   HOUSE. 

RESOURCES. 

Loans  and  discounts $1,225,419  42 

Overdrafts 663  86 

DuefromBanks 70,867  78 

Due  from  the  Directors  of  the  Bank $56,500 

Real  estate 178,074  16 

Specie 154,862  22 

Cash  Items,  viz :  Checks  and  sight  drafts  on  solvent 

Banks,  taken  in  the  course  of  the  day  previous 109,001  93 

Stocks 146,398  90 

Bills  of  solvent  Banks 19,544  00 

Loss  and  expense  account 3,931  42 

$1,908,763  69 
LIABILITIES. 

Capital $979,200  00 

Circulation  registered $125,802  00 

Less  notes  on  hand 28,080  00  97,722  00 

Profits 41,042  91 

Due  to  Banks 175,080  77 

Due  to  Individuals  and  Corporations  other  than  Banks. .  16,780  87 

Due  Depositors  on  demand 597,749  14 

Amount  due,  not  included  under  either  of  the  above 

heads,  for  dividends  unclaimed 1,188  00 

$1,908,763  69 

State  of  New  York,  County  of  New  York,  ss.  :  , 

President,  and ,  Cashier   of  the  Bank,  an  Associated 

Bank,  located  and  doing  business  at  New  York  City,  in  said  county, 
being  duly  and  severally  sworn,  each  for  himself,  saith,  that  the  fore- 
going is,  in  all  respects,  a  true  statement  of  the  condition  of  the  said 
Bank,  before  the  transaction  of  any  business,  on  the  morning  of  Satur- 
day, the  26th  day  of  September,  in  the  year  one  thousand  eight 
hundred  and  fifty-seven,  in  respect  to  each  and  every  of  the  items  and 
particulars  above  specified,  according  to  the  best  of  his  knowledge  and 
belief ;  and  that  the  business  of  the  said  Bank  has  been  and  is  trans- 
acted at  the  location  aforesaid. 

(Signed) ,  President. 

,  Cashier. 

Severally  subscribed  and  sworn  by  both  deponents,  the  10th  day  of 
October,  1857. 

(Signed)  J.  VAN  NAME,  Commissioner  of  Deeds. 


BAD   PRACTICES   CORRECTED.  325 

was  not  beyond  the  constructive  ingenuity  of  dis- 
honest bankers.  The  accounts  could  be  so  kept  as  to 
justify,  technically,  a  different  analysis  from  that 
contemplated  by  the  law,  and  the  result  could  be 
shaped  accordingly. 

It  was  not  until  the  Clearing  House  was  organized 
that  the  Quarterly  Statements  of  our  city  banks  could 
be  depended  on  for  general  accuracy.  It  was  only 
when  the  Clearing  House  records  were  brought  to 
such  perfection  as  to  give  the  means  of  analysis  and 
test  beyond  dispute,  that  the  positive  integrity  of 
those  statements  could  be  guaranteed  to  the  public. 
That  concealment  can  yet  be  practiced,  in  some 
details,  is  true  ;  but  the  main  fact  of  truth  is  assured 
to  the  public. 

It  has  been  shown,  that  the  moment  a  bank 
increases  its  loans  imprudently,  it  begins  to  feel  the 
check  of  depletion  in  its  specie ;  and  if  it  does  not 
return  immediately  within  the  common  average,  it  is 
subject  to  discipline,  from  which  there  is  no  escape. 
But  what  is  to  prevent  a  bank  from  making  had 
loans,  and  becoming  gradually  insolvent  ?  What  is 
to  prevent  the  absorption  of  the  funds  by  a  few  per- 
sons— by  the  directors,  and  a  "startling  develop- 
ment" some  day  when  it  is  least  expected?  This 
question  brings  into  view  a  cause  of  jealousy  that 
was  manifested  by  opposition  to  a  Constitution,  on 
the  first  organization  of  the  Clearing  House.  It  was 
feared  that  an  inquisitorial  power  might  grow  up,  and 
find  pretexts  for  arbitrary  supervision ;  and  even  for 
inspection  into  personal  accounts.  While  the  practi- 
cal action  of  the  House  has  developed  no  such  ten- 


826  THE  NEW   YORK   CLEARING   HOUSE. 

dency,  it  has  wrought  a  healthful  change  in  the 
business  of  each  bank,  enforced  better  judgment  over 
its  internal  affairs,  improved  the  character  of  its 
loans,  and  started  anew  the  subject  of  bank  disci- 
pline; so  that,  not  only  is  all  jealousy  dispelled,  but 
every  member  of  the  Association  has  come  to  regard 
it  as  a  necessary  auxiliary  to  his  own  prosperity ! 

The  improvement  in  the  character  of  its  loans  is 
consequent  upon  the  fact,  that  if  a  bank  becomes 
embarrassed  by  their  imj)rudent  extension,  it  can  get 
a  good  class  of  paper  rediscounted,  and  thus  obtain 
immediate  relief;  whereas,  if  its  discounted  paper  is 
of  a  low  grade,  or  if  the  assistance  required  is  to  help 
the  directors  only,  and  not  its  dealers  generally,  it 
loses  sympathy  and  reputation.  The  character  of  its 
discounted  bills  is,  therefore,  its  sheet-anchor  in  a 
storm.  In  fact,  the  credit  of  the  Clearing  House 
Association  would  itself  be  impaired,  if  it  should 
allow  one  of  its  members  to  fail  from  inability  to  con- 
vert good  assets  into  cash  funds. 

Before  the  establishment  of  the  Clearing  House,  a 
bank  might  have  maintained  specie  payments  with 
the  other  banks  almost  to  the  entire  exhaustion  of  its 
means  of  liquidation  with  the  public.  It  could  have 
borrowed  or  bought  specie  continuously  for  a  long 
period,  without  exposure.  It  cannot  now  horrow  or 
huy  a  dollar,  without  the  knowledge  of  the  House. 
It  is  arrested  immediately,  in  the  first  steps  towards 
insolvency. 

There  is  one  fact  stated  in  the  foregoing  description 
which  deserves  repetition,  for  the  testimony  that  it 


WHOLESOME   KESULTS.  327 

bears  to  the  admirable  working  of  the  system  in  its 
practical  details.  It  is,  that  the  exchanges  have  heen 
made,  and  the  liquidations  effected,  for  Jive  years, 
without  an  error  or  loss  of  one  cent. 

The  whole  amount  of  bank  funds  that  passed 
through  the  House,  up  to  August  31,  1858  —  was 
thirty  thousand  six  hundred  and  seventy-Jwe  mil- 
lions, nine  hundred  and  thirty-three  thousand,  five 
hundred  and  fifty-six  dollars,  and  fifty-six  cents — 
$30,675,933,556.56. 

The  amount  of  specie  or  its  representative  certifi- 
cates received  and  paid  out,  during  the  same  period, 
was  fifteen  hundred  and  seventy-four  millions,  four 
hundred  and  thirty  thousand,  three  hundred  and 
thirty  dollars  and  forty-six  cents — $1,574,430,330.46, 

The  specie  is  counted  four  times,  twice  when 
received,  and  twice  when  paid. 

To  avoid  carrying  bags  of  coin  up  to  the  rooms,  a 
clerk  is  stationed  in  the  Bank  of  ITew  York  on  the 
first  floor,  who  gives  receipts  for  it,  which  receipts  are 
presented  at  the  settling  desk.  A  speaking-tube 
enables  the  Manager  to  communicate  with  the  Clerk 
below,  and  thus  to  verify  such  transactions. 

The  expense  of  conducting  this  vast  amount  of 
business  does  not  exceed  eight  thousand  dollars  a 
year.  This  covers  salaries,  clerk  hire,  and  the  pay  of 
a  detective  police  officer,  who  is  always  in  attendance 
while  the  rooms  are  open.  Stationery  bills  and  rent 
amount  to  about  eight  thousand  dollars  a  year ;  but 
these  are  not  strictly  chargeable  to  the  conduct  of 
the  business.      In  fact,  the  stationery  bills  of  the 


328  THE    NEW   YOEK   CLEAEING    HOUSE. 

several  banks  are  much  less  for  being  executed  under 
one  order,  and  the  Hoase  acts  merely  as  an  agent  to 
get  the  printing  done.  Instead  of  the  old  paper 
labels  to  bags  of  coin,  it  furnishes  strips  of  leather, 
printed  with  the  several  amounts  that  are  sealed  up. 

In  this  account  of  the  Clearing  House,  the  author 
has,  doubtless,  overlooked  some  of  its  bearings.  The 
original  idea  of  its  founders  was,  simply  to  facilitate 
the  exchanges  between  the  banks.  It  has  already 
added  to  this  many  other  advantages  and  uses  which 
were  not  contemplated  ;  and  more  are  suggested.  It 
has  put  an  end  to  speculative  banking  in  New  York. 
It  has  exerted  a  powerful  influence  to  arrest  specula- 
tive commerce.  It  has  set  the  example  of  positive 
liquidation,  which  henceforth  must  spread  and  in- 
crease. Especially,  in  the  organization  of  accounts,  it 
has  gained  results  which  were  before  thought  to  be 
out  of  reach.  There  is  probability,  at  least,  that  the 
l^ew  York  Clearing  House  leads  the  way,  in  a  prac- 
tical use  of  statistics  and  commercial  facts,  far  beyond 
our  present  attainments,  and  for  which  there  has  long 
been  great  need. 

To  Mr.  George  D.  Lyman,  the  Manager  of  the 
Clearing  House,  belongs  chiefly  the  credit  of  system- 
atizing its  details,  planning  its  records,  and  bringing 
them  to  their  present  state  of  efliciency  and  perfec- 
tion. His  practical  acquaintance  with  the  banking 
business,  gained  as  Clerk  and  Teller  in  several  insti- 
tutions of  high  standing,  have  well  qualified  him  to 
discharge  the  duties  of  his  responsible  office ;  while 
the  intelligence,  zeal,  and  perseverance  with  which 
he  follows  up  every  suggestion  that  occurs  in  the 


TABLES.  329 

working  of  the  system,  is  a  guarantee  for  any  improve- 
ments that  may  be  required,  or  of  which  it  is  sus- 
ceptible. 

To  Mr.  "William  A.  Camp,  the  Assistant  Man- 
ager, to  whom  is  intrusted  the  principal  labor  of 
details,  is  due  the  merit  of  unusual  accuracy  and 
promptness  in  the  daily  proofs,  on  which  directly 
depends  the  convenience  of  fifty  settling  clerks,  and 
of  hundreds,  if  not  thousands  of  bank  dealers. 

The  following  tables,  copied  from  the  Clearing 
House  records,  exhibit  the  rise  and  fall  of  bank 
credits,  in  the  City  of  Kew  York,  from  the  first  of 
August  1853,  to  the  31st  of  August  1858. 

The  accompanying  diagram  illustrates  these  tables 
in  fluctuations  from  week  to  week  of  the  loans, 
specie,  and  deposits.  The  scale  is  constructed  on  the 
actual  averages  of  the  year  ending  on  the  29th  of 
July  1855,  which  were  ninety  millions  of  loans,  fifty- 
five  millions  of  deposits,  and  fourteen  millions  of 
specie. 

Each  line  across  the  diagram  represents  one  million 
of  dollars  in  the  loans  and  the  deposits  ;  and  half  a 
million  in  the  specie.  The  lines  up  and  down  repre- 
sent the  weeks.  •  The  scale  for  loans  is  on  the  left 
hand;  that  for  deposits,  on  the  right;  and  that  for 
specie,  in  the  middle.  By  following  the  line  for  any 
week  of  the  year  to  its  intersection  with  the  other 
lines,  and  thence  referring  to  the  respective  scales, 
the  relative  amount  of  loans,  deposits,  and  specie,  is 
ascertained. 


330 


THE  NEW  YORK  CLEAEING  HOUSE. 


WJzJEKlIL'Sr    -A-^^T^BH-A-O-ES    OF    THE 


ITE"W^ 


FROM    AUGUST,    1858,    TO     AUGUST,    1858. 


1854 

Loans. 

Spkcib. 

ClECULATION. 

Deposits. 

Aug. 

6  .. 

..  97,889,617  ... 

.  9,746,452  ... 

.  9,510,465  .. 

. .  89,410,756 

13  .. 

..  95,562,277  ... 

.  10,654,618  ... 

.  9,451,945  .. 

. .  39,166,712 

20  .. 

. .  93,866,970  . . . 

.  11,092,552  ... 

.  9,414,696  .. 

..  39,817,718 

27  .. 

. .  92,386,954  ... 

.  ii,3i9,o4g  ... 

.  9,427,191  •• 

..  38,43 1, 808 

Sept. 

3  .. 

..  91,741,338  ... 

.  11,268,049  ... 

.  9,554,294  .. 

..  38,502,970 

10  .. 

.  91,108,347  ... 

.  11,380,693  ... 

.  9,597,336  .. 

..  38,545,164 

17  .. 

. .  90,190,589  ... 

.  11,860,235  ... 

.  9,566,723  .. 

..  38,6i2,3oi 

24  .. 

. .  90,092,765  ... 

.  11,340,925  ... 

.  9,477,541  .. 

. .  39,312,334 

Oct. 

1  .. 

. .  90,149,540  ... 

.  11,231,912  ... 

.  9,521,665  .. 

..  38,968,661 

8  .. 

. .  89,128,998  ... 

.  10,266,602  ... 

.  9,673,458  .. 

..  38,985,760 

15  .. 

.  87,837,273  ... 

.  11,330,172  ... 

.  9,464,714  .. 

. .  37,435,499 

22  .. 

..  85,367,981  ... 

.  io,3o3,254  ... 

.  9,388,543  .. 

..  36,186,864 

29  .. 

. .  83,400,321  ... 

.  10,866,672  ... 

.  9,3oo,35o  . . 

..  35,73i,o38 

Nov. 

5  .. 

. .  83, 092,630  ... 

.  11,771,880  ... 

.  9,492,i58  .. 

. .  36,241,623 

12  .. 

..  82,882,409  ... 

.  12,823,575  ... 

.  9,287,629  .. 

..  37,970,796 

19  .. 

..  33,717,622  ... 

.  13,691,324  . . . 

.  9,i5i,443  .. 

..  39,047,016 

26  .. 

..  84,802,530  ... 

.  13,343,196  ... 

.  9,032,769  .. 

..  42,099,942 

Dec. 

3  .. 

.  85,824,756  ... 

.  12,830,772  ... 

.  9,133,586  .. 

..  39,121,739 

10  .. 

.  86,708,028  ... 

.  12,493,760  ... 

•  9,075,704  .. 

. .  39,600,092 

17  .. 

..  87,865,073  ... 

.  12,166,020  ... 

.  8,939,830  .. 

..  39,243,501 

24  .. 

..  88,760,623  ... 

.  11,981,270  ... 

.  8,867,261  .. 

.,  40,262,979 

81  .. 

. .  90,162,106  ... 

.  11,058,478  ... 

•  8,927,013  .. 

..  41,372,382 

1854 

Jan. 

7  .. 

..  90,133,887  ... 

.  ii,5o6,i24  ... 

.  9,075,926  .. 

..  38,551,290 

14  .. 

. .  90,010,012  ... 

.  11,894,453  ... 

.  8,668,344  .. 

. .  40,516,717 

21  .. 

.  90,068,738  ... 

.  1 1,455, i56  ... 

.  8,6o5,235  .. 

. .  41,311,989 

2S  .. 

.  89,759,465  ... 

.  11,117,958  . . . 

.  8,642,677  .. 

.  41,405,422 

Feb. 

4  .. 

.  90  549,577  . . . 

.  11,634,653  ... 

.  8,996,675  .. 

.  41,476,160 

11  .. 

.  91,434,022  .. . 

.  11,872,126  ... 

.  8,994,083  .. 

.  42,983,138 

18  .. 

..  92,698,085  ... 

.  11,742,384  ... 

.  8,954,464  .. 

..  43,257,792 

25  .. 

. .  93,529,716  . . . 

.  11,212,693  ... 

.  8,929,314  .. 

. .  42,965,270 

March  4  .. 

. .  94,558,421  ... 

.  io,56o,4oo  ... 

.  9,209,83o  .. 

..  41,655,792 

11  .. 

..  94,279,994  ... 

.  9,832,483  ... 

.  9,137,555  .. 

.  40,955,635 

18  .. 

. .  93,418,929  ... 

.  10,018,456  ... 

.  9,^55,781  .. 

. .  40,278,250 

25  .. 

..  92,972,711  ••• 

.  10,132,246  ... 

.  9,209,406  .. 

. .  40,124,736 

AprL 

1  .. 

. .  92,825,024  ... 

.  10,264,009  ... 

.  9,395,820  .. 

. .  39,861,920 

TABLES. 


331 


Loans. 

92,551,808 
91,686,274 
90,376,340 
90,245,049 
90,739,721 
90,245,928 
90,886,728 
90,981,974 
91,916,710 
91,015,171 
90,063,573 
88,751,952 
88,608,591 
88,347,281 
90,437,004 
92,011,870 
92.588,579 
93,723,141 
93,435,057 
92,880,108 
91,447)075 
91,891,188 
91,528,244 
91,639,782 
92,095,911 
92,102,018 
91,880,525 
88,618,936 
87,092,810 
84,709,286 
88,869,101 
82,717,052 
82,191,994 
81,699,705 
81,678,428 
80,598,686 
80,946,668 
80,721,224 
81,658,637 

82,244,706 
88,976,081 
35,447,998 


Specie. 
10,188,141 
11,044,044 
10,526,976 
10,951, i53 
11,487,040 
12,382,068 
12,118,043 
10,981,531 
10,281,969 

9,617,180 
io,oi3,i57 

9,628,875 
11,180,800 
12,267,318 
15,074,098 
15,720,809 
1 5.386.864 
14,468,981 
18,522,028 
14,253,972 
14,895,072 
14,714,618 
14,446,817 
14,484,259 
12,982,386 
12,042,244 
io,63o,5i7  ■ 
11,180,877 
10,820,163 

9,826,768 
10,004,686 
10,472,538 
10,801,532 
10,200,988 
10,488,383 
10,484,501 
11,471,841 
11,490,495 
12,076,147 

18,596,968 
15,488,525 
16,872,127 


ClEOTTLATION. 

9,718,216  . 

9,533,998  . 

9,358,854  . 

9,877,687  . 

9,828,008  . 

9,507,797  . 

9,480,018  . 

9,284,807  . 

9,881,714  . 

9,807,889  . 

9,144,284  . 

9,009,726  . 

9,068,253  . 

9,195,757  . 

8.887.681  . 
8,768,289  . 
8.756.777  . 
9,124,648  , 
8,917,179  . 
8,855,523  . 
8,811,869  . 

8.984.682  . 
8,968,707  . 
8,820,609  • 
8,802,623  , 
8,712,186  . 
8,918,492  . 
8,534,188  . 
8,497,556  . 
8,181,983  . 
8,288,126  . 
8,197,444  . 
7,877,604  . 
7,7i8,i58  . 
7,849,289  . 
7,480,888  . 
7,261,111  . 
6,914,866  . 
7,075,880  . 

7,049,982  . 

6,686,461  . 

6,681,355  . 


DEPOsrra, 

38,998,744 
89,729,780 
39,153,964 
40,270,891 
40,625,252 
42,212,552 
42,591,851 
41,114,768 
50,775,744 
51,871,900 
51,248,245 
49,988,688 
51,865,928 
54,808,679 
56,549,703 
58,871,544 
58,925, i5i 
58,271,954 
57,582,455 

57,087,727 
57,o55,5o5 
58,114,408 
56,080,400 
56,489,110 
55,221,762 
54,3o8,5i2 
51,480,875 
5o,352,3o6 
47,781,224 
45,058,781 
48,504,964 
48,619,826 
44,100,821 
48,409,843 
48,491,999 
48,118,595 
44,384,684 
44,877,723 
45,402,377 

47,740,767 
50,614,846 
53,290,817 


332 


THE   NEW   TOEK   CLEAELNG   HOUSE. 


1865 

LoAire. 

Bpeoiz. 

ClBCULATION. 

Jan. 

27  ... 

.    86,654,657  .. 

.   16,697,260  .. 

.    6,639,823     ... 

Feb. 

3  ... 

.    88,145,697   .. 

.  17,439,196  .. 

.    7,000,766    ... 

10  ... 

.    89,862,170  .. 

.  17,124,391    .. 

.    6,969,111     ... 

17  ... 

.    90,85o,o3i   .. 

.   17,339,086  .. 

.    6,941,606    ... 

24  ... 

.    91,590,505  .. 

.   16,370,875  .. 

.    6,963,562     ... 

March  3  ... 

.    92,386,125  .. 

.   16,531,279  .. 

•    7,106,710    ... 

10  ... 

.    92,331,789   .. 

. .  16,870,669  .. 

.  7,'3i,998  .-. 

17  ... 

.    92,447,345  .. 

.  16,933,933   . . 

.  7,061,018  ... 

24  ... 

.    93,050,773   .. 

..   16,602,729  .. 

.  7,452,231   ... 

31  ... 

.    93,634,041    .. 

.    i6,oi8,io5  .. 

..  7,337,633  ... 

April 

7  ... 

•    94,499,394  .. 

.  14,968,004  .. 

.  7,771,534  ... 

14  ... 

.    94,140,399  .. 

..  14,890,979  .. 

.  7,523,528  ... 

21   ... 

.    93,632,893  . . 

.   14,355,041   .. 

.  7,5io,i24  ... 

' 

28  ... 

.     92,5o5,95i    .. 

.   14,282,424  .. 

.  7,610,985  ... 

May 

5   ... 

.    93,093,243   . . 

.  l4,325,o5o  .. 

.  8,087,609  ... 

12  ... 

.     91,642,498  .. 

.  14,585,626  .. 

■  7,804,977  ••• 

19   ... 

.    91,675,500  .. 

.  i5,225,o56  .. 

.  7,638,630  ... 

26  ... 

.    91,160,518  .. 

.  i5,3i4,53i   .. 

•  7,489,637   ... 

Jane 

2  ... 

.    91,197,652   .. 

.   15,397,674  .. 

.  7,555,609  ... 

9   ... 

•    92,109,097   •• 

.   i5,oo5,i55  .. 

.  7,502,568  ... 

16   ... 

.     93,100,335   .. 

.   14,978,559  .. 

.  7,452,161   ... 

28  ... 

.     94,029,425   .. 

.  14,705,629  .. 

.  7,335,653  ... 

80  ... 

.     95,586,424   .. 

.   15,640,146  .. 

.  7,396,119  ••• 

July 

7  ... 

.     97,852,491    .. 

.   15,381,093  .. 

.  7,743,069  ... 

14  ... 

.    98,521,002   .. 

.  16,576,506  .. 

.  7,5i5,724  ... 

21  ... 

.     99,029,147   .. 

•_  15,918,999  .. 

.  7,407,086  ... 

28  ... 

•    99,083,799  .. 

.'  15,920,976  .. 

.  7,409,498  ... 

Aug. 

4  ... 

.  100,118,569  .. 

.   15,298,358  .. 

.  7,642,903  ... 

11   ... 

.  100,774,209  .. 

.   15,280,669  .. 

.  7,714,401   ... 

18  ... 

.  ioi,i54,o6o  .. 

.  14,649,245  .. 

.  7,610,106  ... 

25   ... 

.  100,604,604  .. 

.  13,326,378  .. 

.  7,582,095  ... 

Sept. 

1   ... 

.  100,436,970  ,. 

.  12,852,823  .. 

.  7,620,178  ... 

8  ... 

.  100,273,733  .. 

.   12.006,625  .. 

.  7,861, i53  ... 

15  ... 

.    99,397,009  .. 

.    I2,2l3,240    .. 

.  7,721,825  ... 

22  ... 

.    98,581,734  .. 

.  11,655,391  .. 

.  7,717,860  ... 

29  ... 

.    97,385,225  .. 

.    9,919,124  .. 

•  7,724,970  ... 

Oct. 

6  ... 

.    95,5i5,o2i   .. 

.  11,110,687  .. 

.  7,853,217  ... 

13  ... 

.    95,059,420  .. 

.  11,138,878  .. 

.  7,840,114  ... 

20  ... 

.    95,103,376  ... 

.  12,461,723  .. 

.  7,888,164  ... 

27  ... 

.    94,216,373  .. 

.    11,163,521    .. 

.  7,828,489  ... 

Nov. 

8  ... 

.    93,369,079  .. 

.   11,106,298   .. 

.  8,071,508  ... 

10  ... 

.    92,454,290  .. 

.   10,855,526  .. 

.  8,088,608  ... 

17  ... 

.    92,029,920  .. 

.  11,302,917  .. 

.  7,941,579  ••• 

TABLES. 


333 


Loans. 
92,312,408 
92,526,921 
93,189,803 
93,8oo,i38 
94,380,487 
95,114,060 

95,863,390 

96,145,408 

96,382,968 

96,887,221 

97,970,611 

98,344,077 

99,4oi,3i5 

100,745,448 

102,632,235 

103,909,688 

104,528,298 

104,533,576 

104,745,307 

106,962,618 

107,840,435 

106,765,085 

105,538,864 

105,325,962 

io3,8o3,7g3 

103,002,320 

102,207,767 
102,451,275 
103,474,921 
104,168,881 
105,626,995 
107,087,525 
109,267,583 
109,748,042 
110,873,494 
111,346,589 

112,221,563 

112,192,322 
111,406,755 
110,188,004 
109,373,911 
109,560,943 


Specie. 

1,715,239 

1,227,134 

1,844,625 

1,584,075 

2,088,359 

0,788,098 

1,687,209 

1,777,7" 
3,385,260 
2,733,059 
3,640,437 
4,233,329 
5,678,736 
5,835,874 
5,640,687 
5,170,946 
4,045,024 
4,36g,556 
4,216,841 
3,381,455 
2,626,094 
2,958,i32 
3,102,858 

2,85o,228 

3,3i7,365 
2,796,541 
3,850,333 
4,021,289 
6,166,180 
7,414,680 
7,871,955 
7,069,688 
6,829,236 
4,793,409 
5,326,i3i 
3,910,848 
4,328,253 
3,270,602 
2,806,673 
2,914,732 
2,965,237 
3,098,876 


Circulation. 

7,779,567  . 

7,841,654  . 

7,861,741  . 

7,7oi,o52  . 

7,778,893  . 

7,841,946  . 

7, 903, 656  . 

7,612,507  . 

7,462,706  . 

7,406,986  . 

7,622,826  . 

7,819,122  . 

7,693,441  . 
7,664,688 

7,754,392  . 

7,888,176  . 

7,863,148  . 

7,912,581  . 

7,943,253  . 

8,347,498  ■ 

8,281,525  , 

8,22i,5i8  . 

8,246,121  . 

8,7i5,i63  , 

8,662,485  . 

8,488,1 52  . 

8,335,097  . 

8,269,151  , 

8,43o,252  , 

8,360,735  , 

8,278,002  , 

8,250,289  , 

8,637,471  . 

8,405,576  , 

8,346,243  , 

8,386,285  , 

8,646,043  , 
8,676,759 
8,584,499 
8,588,4i3 
8,589,745 
8,887,860 


Depobits. 

54,612,212 

58,663,668 

55,474,116 

56,111,334 

56,555,999 

56,736,775 

58,320,323 
58,575,652 
60,161,127 
60,430,978 
61,622,874 
62,128,682 
64,341,903 
66,329,670 
67,237,728 
67,881,084 
67,020,460 
67,153,493 
67,661,944 
67,985,678 
68,300,783 
66,839,625 
66,285,880 
65,025,870 
64,854,416 
63,9o5,5i2 
63,874,195 
64,527,837 
67,033,708 
69,586,695 
70,381,210 
71,349,933 
77,3i8,825 
71,522,716 
72,744,569 
72,381,621 
73,075,328 
71,377,871 
70,357,736 
69,022,934 
67,606,118 
67,225,342 


834 


THE   NEW   YOKK   CLEARING   HOUSE. 


185& 

Loans. 

Spkoik 

ClBCULATION. 

Deposits. 

Sept.  18  .... 

109.579,775  ... 

.  12,281,387  .. 

.    8,741,064    .. 

..  66,049,41 

20  .... 

109,715,435  ... 

.  12,270,685  .. 

.  8,760,383  .. 

..  65,866,42 

27  .... 

108,992,205  ... 

.  10,873,220  .. 

.  8,665,194  .. 

..  63,661,17 

Oct.       4  ... 

107,931,707  ... 

.   11,015,184  .. 

.  8,830,628  .. 

..  62,052,54 

11  .... 

107,147,392   ... 

.  10,382,751   .. 

.  8,748,930  .. 

..  60,978,20 

18  .... 

105,929,265  ... 

.   10,846,857  .. 

.  8,696,736  .. 

..  60,319,71 

25  .... 

104, 1 56,483  ... 

■   10,580,795  .. 

.  8,649,802  .. 

..  58,696,45 

Nov.     1  .... 

103,142,093  ... 

.  11,057,675  .. 

.  8,686,835  ,. 

. .  58,024,12 

8  .... 

io2,5o8,639  ... 

.   ii,5i6,420  .. 

.  8,946,721   .. 

..  56,933,38 

15  .... 

io3,554,45o  ... 

.   12,253,737   .. 

.  8,856,977  .. 

..  58,942,04 

22  .... 

104,504,919  ... 

.   12,971,868  .. 

.  8,818,323  .. 

..  65,362,52 

29  .... 

io5,483,o53  ... 

.   12,123,887   •• 

.  8,608,228  .. 

..  61,570,26 

Dec.      6  ... 

106,898,534  ... 

.   12,278,347  .. 

.  8,671,758  .. 

..  62,923,96 

13  .... 

108,336,586  ... 

.  10,832,543  .. 

.  8,5i6,854  .. 

..  62,854,77 

20  .... 

108,334,593  ... 

.  ii,i5i,3i7  .. 

.  8,397,440  .. 

..  62,265,i5 

27  ... 

108,527,429  ... 

.  10,392,428  .. 

.  8,387,167  .. 

..  62,259,39 

1857. 

Jan.      3 

109,149,153  ... 

.  11,172,244  .. 

.  8,602,1 13  .. 

..  63,677,82 

10  .... 

no,i5o,234  .. . 

.   11,090,109  .. 

.  8,328,394  .. 

..  64,316,55 

17  .... 

110,860,401   ... 

.  11,955,054  .. 

.  8,047,065  .. 

..  66,076,98 

24  .... 

111,094,415  ... 

.  11,633,924  .. 

.  7,879,026  .. 

..  66,877,98 

81   .... 

111,785,332  ... 

.   12,191,825  .. 

.  8,024,948  .. 

..  67,241,67 

Feb.  '  7  .... 

112,876,712  ... 

.  11,143,894  .. 

.  8,426,817  .. 

..  65,997, 16 

14  .... 

112,722,799  ... 

.  10,497,382  .. 

•  8,i5i,799  .. 

..  65,943,49 

21  .... 

111,773,571   ... 

.  10,432, i58  .. 

.  8,106,074  .. 

..  65,098,89 

28  .... 

111,137,717  ... 

.  10,645,254  .. 

.  8,159,275  .. 

..  64,627,06 

March  7 

111,899,649  ... 

.  11,707,346  .. 

.  8,465,697  .. 

..  64,894,95 

14  .... 

1 13, 250,988  ... 

.  11,077,732  .. 

.  8,452,540  .. 

..  66,694,52 

21  .... 

113,448,692  ... 

.   11,291,373  .. 

.  8,494,238  .. 

..  65,975,94 

28  .... 

112,884,024  ... 

.   11,325,733  .. 

.  8,473,829  .. 

..  66,228,41 

April    4 

114,833,902  ... 

11,538,732  .. 

.  8,812,328  .. 

..  66,884,08 

11  ... 

115,374,717  ••• 

.   10,884,490  .. 

.  8,787,344  .. 

..  67,042,86 

18  ... 

114,398,174  ... 

.   12,061,372  .. 

.  8,770,828  .. 

..  67,547,24 

25  .... 

113,391,910  .. . 

.   11,827,862  .. 

.  8,736,768  .. 

..  67,068,42 

May      2  .... 

114,409,275  .. . 

.   12,009,910  .. 

.  9,oo6,566  .. 

..  68,078,67 

9  ... 

ii5,o68,322  ... 

.   12,011,491   .. 

.  9,182,783  .. 

..  67,954,46 

16  .... 

114,620,042  ... 

12,543,693  .. 

.   8,935,297  .. 

.  68,595,16 

23  .... 

114,049,102  ... 

.  13,126,735  .. 

.  8,738,025  .. 

. .  68,517,24 

80  ... 

114,049,633  ... 

.    I2,8i5,5i5  .. 

.  8,696,693  .. 

..  68,565,go 

Juno     6  

115,338,592  ... 

.   i3, 134,714  .. 

.  8,838,575  .. 

. ,  69,233,09 

18  ... 

Ii5,4i2,54i    ... 

.   11,974,879  •• 

.  8,696,893  .. 

..  68,111,32 

20  ... 

ii5,n4,765  ... 

•   12,790,701    .. 

.  8,590,132  ,. 

..  68,791,04 

27  ... 

ii5,oi5,5o4  . . . 

.   10,901,091    .. 

.  8,5o5,o65  .. 

..  67,212,27 

TABLES. 


335 


LOAKS. 

ii5,o44,3o3 
116,028,617 
117,365,321 
Ii8,848,i3i 
1 20,597, o5o 
122,077,252 
121,241,472 
120,139,582 
116,588,919 

112,221,365 

109,985,573 
108,777,421 
107,791,433 

105,935,499 
101,917,570 
97,245,826 
95,593,518 
95,317,754 
95,866,241 
95,239,247 
95,375,432 
94,963, 1 3o 
96,333,687 
96,526,037 
97,211,690 
^7,902,035 

98,549,983 
98,792,758 
99,473,762 
101,172,642 
102,180,089 
103,602,932 
io3, 783,306 
103,706,735 
103,769,127 
105,021,863 
io5, 293,631 
107,440,350 
109,095,412 
110,588,354 
110,847,617 
111,344,891 


Bpeoie. 
12,837,346 
12,666,146 
13,594,606 
12,956,855 
12,918,014 
11,737,367 
11,360,645 
10,097,178 

9,241,376 
10,227,964 
12,181,857 
i3,556,i86 
13,327,095 
ii,4oo,4i3 
11,476,294 

7,843,231 
10,411,643 
12,883,441 
16,492,153 
19,451,967 
23,167,980 
24,3o3,i44 
26,069,833 
26,058,877 
27,957,326 
27,142,098 

28,561,946 
39,176,838 
3o, 211, 266 
3o, 829,151 
31,273,022 
3o, 652,948 
30,226,274 
3i,4i6,077 
31,658,694 
32,739,731 
32,691,076 
31,902, 656 
30,929,472 
3i,53o,ooo 
32,o36,436 
33,196,449 


ClBCULATION. 

8,901,590  . 

8,693,578  . 

8,448,833  . 

8,528,814  . 

8,665,422  . 

8,981,740  . 

8,780,012  . 

8,694,011  . 

8,671,060  . 

8,673,192  . 

8,322,3i6  . 

8,073,801  . 

7,838,3o8  . 

7,916,102  . 

7,523,599  . 

8,087,441  . 

6,884,739  . 

6,334,748  . 

6,434,312  . 

6,258,652  . 

6,283,417  . 

6,520,783  . 

6,555,000  . 

6,348,494  . 

6,309,466  . 

6,352,187  . 

6,490,403  . 

6,615,464  . 

6,349,325  . 

6,336,042  . 

6,369,678  . 

6,873,931  . 

6,607,270  . 

6,542,618  . 

6,530,759  . 

6,854,624  . 

6,755,958  , 

6,853,852  . 

6,892,231  . 

7,232,332  . 

7,245,809  . 

7,190,170  . 


DspoBira. 

65,391,582 
65,702,597 
67,005,588 
67,377,056 
68,682,088 
67,372,941 
66,814,929 
64,241,471 
60,860,801 
57,260,609 
57,334,121 
57,851,965 
56,918,863 
52,798,365 
49,745,176 
42,696,012 
47,873,901 
5i, 853, 159 
56,424,807 
60, 601, 556 
64,917,932 
64,307,380 
64,444,375 
62,907,999 
63,710,106 
65,239,374 

67,300,760 
65,942,282 
67,723,909 
69,523,586 
70,467,784 
70,544,737 
70,425,906 
72,003,657 
71,728,972 
72,379,748 
73,552,929 
74,173,918 
73,606,709 
76,023,176 
76,790,864 
78,121,025 


336 


THE  NEW   YORK   CLEARING   HOUSE. 


1868 

Loans. 

Speoix. 

ClBCtriATION. 

DXPOBITB. 

AprL 

24  ... 

.  111,003,476  .. 

..  34,113,891  . 

..  7,i4o,85i   .. 

..    79,198,893 

May 

1   ... 

.  111,868,456  .. 

..  35,064,214  . 

..  7,43i,8i4  .. 

.,  8o,563,3o3 

8  ... 

.  112,741,955  .. 

..  35,453,146  . 

..  7,735,o56  .. 

..  81,727,146 

15  ... 

.  114,119,288  .. 

..  34,730,728  . 

..  7,502,975  .. 

. .  33,599,295 

22  ... 

.  u5,658,o82  .. 

..  34,047,446  . 

..  7,307,445  .. 

..  84,297,738 

29  ... 

.  ii6,65o,943  .. 

..  31,496,144  . 

..  7,252,616  .. 

..  83,152,244 

June 

5  ... 

.  116,424,597   .. 

..  32,790,332  . 

..  7,548,830  .. 

..  83,5o6,886 

12  ... 

.  n6,022-,i52  .. 

..  33,367,253  . 

..  7,367,725  .. 

..  84,283,194 

19  ... 

.  117,797,047  .. 

..  32,396,456  . 

..  7,297,63i   .. 

..  85,280,949 

24  ... 

.  118,823,401   .. 

..  31,948,089  . 

..  7,215,689  .. 

..  85,95o,3o7 

July 

3  ... 

.  119,812,407  .. 

..  33,830,232  . 

..  7,458,190  .. 

..  88,337,184 

10  ... 

.  118,863,937  .. 

. ,  34,705,593  . 

..  7,571,373  .. 

. .  92,337,042 

17  ... 

.  119,165,731   .. 

..  35,329,988  . 

..  7,346,213  .. 

..  90,064,144 

24  ... 

.  118,940,482  .. 

..  35,5i5,243  . 

..  7,351,045  .. 

..  90,105,690 

81   ... 

.  ii9,85o,456  .. 

..  35,712,107  . 

..  7,408,365  .. 

..  91,145,874 

Aug. 

7  ... 

.  120,892,857  .. 

..  35,145,844  . 

..  7,784,415  .. 

..  90,339,478 

14  ... 

.  123,374,459  .. 

. .  3 1,1 50,473  . 

..  7,588,939  .. 

. .  89,826,080 

21  ... 

.  126,341,827  .. 

..  28,343,998  . 

..  7,484,306  .. 

. .  89,159,341 

28  ... 

.  126,084,424  .. 

. .  27,817,006  . 

..  7,466,846  .. 

••  87,719,139 

Totals  and  Averages  of  the  foregoing  Tables^  for  the 
Years  ending  at  the  given  Dates  : 


July  31, 
July  31, 
July  31, 
July  31, 
July  31, 


Loans.  Specib.  Deposits. 

1854— Total,       4,690,181,881       696,813,662     3,199,800,399 


Average,      90,195,805        11,477,185         42,287,491 
1855— Total,       4,683,097,192       735,515,384     3,775,339,284 


Average,       90,059,561         14,144,526  55,377,224 

1856— Total,       6,225,378,400       696,290,025     4,400,980,965 


Average,     100,488,046         13,390,192  63,208,919 

1857— Total,       5,781,082,592       618,053,639     4,809,971,107 


Average,     111,174,665         11,885,646  65,195,290 

1858— Total,       6,607,403,139    1,823,396,873    4,496,592,884 


Average,    107,834,676        25,449,940         71,898,419 


FINANCIAL   CHART.  337 

The  average  of  circulation  was,  for  the  year  ending  July  31 : 

1854 $9,228,388 

1855 7,738,839 

1856 7,975,405 

1857 8,604,582 

1868 7,226,475 


The  diagram  exhibits  a  remarkable  coincidence, 
or  parallelism  of  movement,  in  the  several  years.  The 
loans  reach  their  highest  point  on  the  first  week  of 
August  in  1853,  1854,  and  1856 ;  on  the  third  week 
of  August  in  1855,  and  on  the  second  week  of 
August  in  1857.  They  begin  to  fall  at  these  dates, 
and  reach  their  lowest  point  on  the  second  week  of 
November,  in  1853,  1856,  and  1857;  on  the  third 
week  of  November  in  1855,  and  on  the  second 
week  of  December  in  1854: — the  year  uniformly 
going  o.ut  with  an  ascending  average.  Another 
decline  takes  place  from  the  early  part  of  March  or 
April,  previous  to  the  uniform  ascent  to  August. 
There  is  a  general  concurrence  of  movement  with  the 
loans,  in  the  deposits  and  specie.  The  year  1857  is 
exceptional  only  in  the  violence  of  fluctuation  after 
August. 

The  adoption  of  some  scale  of  relation  between  the 
several  movements  which  compose  the  volume  of 
bank  transactions,  will  be  a  great  help  in  forming  a 
judgment  of  its  condition  within  itself,  at  any  given 
period.  The  averages  of  the  year,  ending  with  July 
1855,  are  more  "conservative"* for  this  purpose  than 
those  of  any  other  year  in  the  record.  They  exhibit 
a  remarkable  correspondence  of  movement,  perfect 

15 


338  THE   NEW   YORK   CLEARING   HOUSE. 

agreement  with  tlie  periodical  currents,  whicli  are 
demonstrated  in  the  commercial  system,  and  the  full 
amount  of  depression  in  the  autumn,  which  is  always 
our  most  important  and  critical  season.  The  average 
line  in  the  chart  represents  this  scale.  When  the 
other  lines  recede  from  it  above,  proportionate  expan- 
sion is  indicated;  when  they  recede  below,  propor- 
tionate contraction  or  depression.  When  the  lines 
recede  from  each  other,  and  from  the  scale  also,  there 
is  a  proportionate  destruction  of  the  equiUbrium. 
Beginning  with  August  1854,  it  is  apparent  that 
the  relation  of  the  loans,  specie,  and  deposits,  is  not 
materially  changed  with  respect  to  the  scale,  or  to 
each  other,  up  to  August  1855.  The  lines  are  in  close 
contact,  and  mingle  with  each  other.  But  an  extraordi- 
nary fact  is  developed  after  that  date.  The  propor- 
tion of  specie  with  the  loans  and  deposits,  on  the 
adopted  scale,  is  lost.  It  separates  from  them  in  the 
second  week  of  June ;  in  the  third  week  of  August,  it 
falls  below  the  scale,  and  instead  of  returning  again 
to  cross  and  recross  the  other  lines,  it  continues  per- 
manently below  them ;  and  only  for  two  short  periods, 
about  February  and  June,  does  it  re-ascend  above  the 
scale,  until  the  chasm  is  closed  on  the  first  of  Novem- 
ber 1857.  The  gradual  widening  of  the  gulf  between 
the  specie  and  the  liabilities  after  June  1855  is  shown 
with  singular  clearness  and  force.  There  is  not  a 
more  significant  demonstration  in  the  whole  record 
than  at  this  precise  point.  It  does  not  appear  that 
the  specie  line  sinks  even  so  far  helow  the  scale  as  it 
had  done  at  former  periods;  but  the  deposits  and 
loa/iis  ascend  rapidly  above  the  scale.    In  July,  1856, 


ORIGIN    OF  THE   CLEAKmQ   HOUSE.  339 

the  loans  separated  from  the  deposits  in  a  gradual 
rise,  and  did  not  return  to  the  scale  of  1854  until  the 
panic  of  1857.  As  it  will  be  necessary  to  refer  again 
to  the  chart,  in  the  history  of  that  event,  a  further 
illustration  of  it  here  would  be  superfluous. 


The  first  proposition  to  establish  a  Clearing  House 
in  New  York,  was  made  by  the  late  Albert  Gallatin. 
In  a  pamphlet  of  124  pages,  entitled :  "  Suggestions 
on  the  Banks  and  Currency  of  the  several  United 
States,  in  reference  principally  to  the  suspension  of 
specie  payments,"  published  by  "Wiley  &  Putnam,  in 
the  year  1841,  occur  the  following  paragraphs,  on  pp. 
63  and  64 : 

"There  is  a  measure  which,  though  belonging  to 
the  administration  of  banks,  rather  than  to  legal 
enactments,  is  suggested  on  account  of  its  great 
importance.  Tew  regulations  would  be  more  useful 
in  preventing  dangerous  expansions  of  discounts  and 
issues  on  the  part  of  the  city  banks,  than  a  regular 
exchange  of  notes  and  checks,  and  an  actual  daily  or 
semi-weekly  payment  of  the  balances.  It  must  be 
recollected,  that  it  is  by  this  process  alone  that  a 
Bank  of  the  United  States  has  ever  acted  or  been 
supposed  to  act  as  a  regulator  of  the  currency.  Its 
action  would  not  in  that  respect  be  wanted  in  any 
city,  the  banks  of  which  would,  by  adopting  the  pro- 
cess, regulate  themselves.  It  is  one  of  the  principal 
ingredients  of  the  system  of  the  banks  of  Scotland. 
The  bankers  of  London,  by  the  daily  exchange  of 
drafts  at  the  Clearing  House,  reduce  the  ultimate 
balance  to  a  very  small  sum ;  and  that  balance  is 
immediately  paid  in  notes  of  the  Bank  of  England. 
The  want  of  a  similar  arrangement  among  the  banks 


340  THE   NEW   YORK   CLEARING   HOUSE. 

of  this  city,  produces  relaxation,  favors  improper 
expansions,  and  is  attended  with  serious  inconveni- 
ences. The  principal  difficulty  in  the  way  of  an 
arrangement  for  that  purpose,  is  the  want  of  a  com- 
mon medium  other  than  specie  for  effecting  the  pay- 
ment of  balances.  These  are  daily  fluctuating ;  and 
a  perpetual  drawing  and  re-drawing  of  specie  from 
and  into  the  banks  is  unpopular  and  inconvenient. 

"  In  order  to  remedy  this,  it  has  been  suggested, 
that  a  general  Cash  office  might  be  established,  in 
which  each  bank  should  place  a  sum  in  specie,  pro- 
portionate to  its  capital,  which  would  be  carried  to 
its  credit  in  the  books  of  the  office.  Each  bank  would 
be  daily  debited  or  credited  in  those  books  for  the 
balance  of  its  account  with  all  the  other  banks.  Each 
bank  might  at  any  time  draw  for  specie  on  the  office 
for  the  excess  of  its  credit  beyond  its  quota;  and 
each  bank  should  be  obliged  to  replenish  its  quota, 
whenever  it  was  diminished  one-half,  or  in  any  other 
proportion  agreed  on. 

"  It  may  be  that  some  similar  arrangement  might 
be  made  in  every  other  county,  or  larger  convenient 
district  of  the  State.  It  would  not  be  necessary  to 
establish  there  a  general  cash  office.  Each  of  the 
banks  of  Scotland  has  an  agent  at  Edinburgh,  and  the 
balances  are  there  settled  twice  a  week,  and  paid 
generally  by  drafts  on  London.  In  the  same  manner, 
the  balances  due  by  the  banks  in  each  district  might 
be  paid  by  drafts  on  New  York,  or  any  other  place 
agreed  on," 

These  extracts  contain  the  whole  germ  of  the  Clear- 
ing House  system.  They  comprehend,  essentially, 
the  manner  of  its  action,  by  the  establishment  of  a 
"  cash  office"  (the  coin  depository) ;  and  also,  the 
effect — to  prevent  "  relaxation  and  improper  expan- 
sions ;"  and  they  even  suggest,  negatively,  the  coin 


OEIGIN   OF  THE  CLEAEmO   HOUSE.  34:1 

certificates,  in  the  "  commom  medium  other  than 
specie,  for  effecting  the  payment  of  balances,"  the 
want  of  which  was  "  the  principal  difficnlty  in  the 
way"  of  a  Clearing  House  at  that  time.  The  merit  of 
removing  this  difficulty  belongs  to  Mr.  Fkajstcis  "W. 
Edmonds,  late  Cashier  of  the  Mechanics'  Bank.  A 
year  before  the  organization  of  the  Clearing  House, 
he  induced  the  Bank  of  America,  the  Merchants',  the 
American  Exchange,  and  the  Metropolitan  Banks  to 
join  with  the  Mechanics'  Bank,  and  to  make  up  an 
aggregate  sum  of  one  million  of  dollars  in  coin,  for 
which  the  last  named  institution  issued  its  certificates. 
These  were  received  by  the  other  banks  in  payment 
of  balances,  and  when  the  depositing  banks  were 
creditors,  they  were  entitled  to  a  preference  in  their 
payment  back,  and  were  thus  saved  the  trouble  of 
counting,  and  the  risk  and  burden  of  carrying  coin. 
These  certificates  were  held  as  more  desirable  than 
coin,  on  account  of  the  greater  facility,  expedition, 
and  safety  of  their  transfer. 

Mr.  Edmonds  was  chairman  of  the  committee,  under 
whose  directions  the  Clearing  House  was  organized, 
his  associates  being  Mr.  James  Ptjnnett,  Cashier  of 
the  Bank  of  America,  and  Mr.  Augustus  E.  Silliman, 
Cashier  of  the  Merchants'  Bank — now  Presidents  of 
those  institutions.  The  names  of  these  gentlemen, 
and  also  that  of  Mr.  Lyman,  the  Manager,  are  inse- 
parably connected  with  the  origin  and  early  history 
of  the  New  York  Clearing  House.  But  to  Mr.  Geokge 
Curtis,  the  author  of  its  Constitution,  was  conceded 
by  the  common  voice  of  his  associates,  the  precedence, 
as  it  regards  intelligence  and  ability,  in  regulating 


342  THE  NEW   TOKK   CLEAKING   HOUSE. 

and  administering  its  powers.  Though  not  publicly 
connected  with  the  first  movements  in  favor  of  its 
establishment,  he  made  it  the  subject  of  attentive 
study,  and  prepared  a  plan  for  its  organization  at  a 
very  early  period.  His  personal  influence  was  par- 
ticularly exerted  in  removing  objections,  and  in 
bringing  the  discordant  elements  of  the  Association 
into  harmony  with  its  general  purpose.  Like  Mr. 
Gallatin,  he  appreciated  from  the  outset  all  the 
advantages  that  would  accrue  from  it  to  our  financial 
system ;  and  he  was  unanimously  chosen  as  Chairman 
of  the  Committee  on  Suspensions,  which  made  it  his 
duty  to  take  cognizance  of  all  short-comings  on  the 
part  of  the  different  banks.  This  was  at  the  same 
time,  the  least  popular,  most  important,  and  critical 
post  in  the  Association.  It  exposed  him  to  the  jea- 
lousy of  the  weaker  members  on  one  hand,  and  to 
censures  for  a  dangerous  indulgence  on  the  other; 
but  he  exercised  his  powers  with  such  strict  justice 
and  impartiality,  that  no  instance  of  appeal  from  his 
judgment  is  on  record. 


THE   PANIC.  343 


CHAPTEE  XIX. 

THE   PANIC. 

Up  to  August  1857,  our  commercial  affairs  were 
generally  prosperous.  The  local  journals  throughout 
the  country  represented  business  as  in  a  wholesome 
condition.  High  prices  were  said  to  have  enriched 
the  farmer,  the  stockgi-ower,  and  the  planter.  Trade 
and  mechanical  industry  flourished  with  correspond- 
ing success. 

In  estimating  probabilities  for  the  future,  great 
stress  was  laid  on  the  fact,  that  the  madness  of  rail- 
road building  was  arrested.  The  bond  market,  and 
with  it  improvement  securities  generally,  had  fallen 
into  disrepute.  Stock  companies  could  no  longer 
send  an  agent  to  Em-ope  with  five  millions  of  credit 
tokens,  and  receive  the  money  for  them  within  sixty 
days  from  the  engraver's  press.  Heavy  financial 
negotiations  in  this  direction  were  suspended ;  and 
although  the  country  had  several  lumdred  millions  of 
foreign  capital  in  use,  there  was  no  danger  of  any 
considerable  portion  of  it  being  recalled,  since  our 
home  market  would  reject  the  bonds  which  represent 
it,  at  half  the  par  cost.  We  might,  therefore,  con- 
tinue to  enjoy  the  use  of  this  large  capital,  and  avoid 
the  disaster  consequent  on  a  further  accumulation  of 


S44  THE   PANIC. 

foreign  debt.  The  common  sentiment  was,  that  we 
had  passed  the  dangerous  point  in  railway  credits, 
and  with  the  immense  productions  of  the  year  at  our 
doors,  there  was  little  probability  of  serious  financial 
disturbance.  The  most  sagacious  of  our  city  bank 
ofiicers  saw  no  indications  of  an  unusual  storm  in  the 
commercial  skies.  When  the  loans  reached  the 
unprecedented  height  of  one  hundred  and  twenty-two 
millions  of  dollars,  on  the  eighth  of  August,  they 
pointed  to  the  annual  reduction  of  ten  or  twelve 
millions  in  the  autumn  months,  as  one  of  the  regular 
ebbs  to  which  the  market  is  subject;  but  they  had  no 
foresight  of  extraordinary  pressure,  and  no  dreams  of 
panic.  Credit  was  extended,  but  "  the  country  never 
was  so  rich." 

The  banks  began  to  contract  their  loans  about  the 
eighth  of  August.  Securities  immediately  fell  in  price 
at  the  Stock  Board.  The  failure  of  a  heavy  produce 
house  was  explained  by  the  depression  of  that  par- 
ticular interest  in  the  market.  A  report  of  dishonest 
jobbing,  and  of  the  misuse  of  funds  in  a  leading  Rail- 
way Company,  caused  partial  excitement,  without 
seriously  disturbing  confidence  in  mercantile  credit. 

On  the  twenty-fourth  of  August,  the  suspension  of 
the  Ohio  Life  Insurance  and  Trust  Company  was 
announced.  It  struck  on  the  public  mind  like  a 
cannon  shot.  An  intense  excitement  was  manifested 
in  all  financial  circles,  in  which  bank  oflScers  partici- 
pated with  unusual  sensitiveness  and  want  of  self- 
possession.  Flying  rumors  were  exaggerated  at  every 
corner.  The  holders  of  stock  and  of  commercial  paper 
hurried  to  the  broker,  and  were  eager  to  make,  what 


GENERAL   OUTLINE.  345 

a  week  before  they  -would  have  shunned  as  a  ruinous 
sacrifice. 

Several  stock  and  money  dealers  failed,  and  the 
daily  meetings  of  the  Board  of  Brokers  were  charac- 
terized by  intense  excitement. 

Every  individual  misfortune  was  announced  on  the 
news  bulletins  in  large  letters,  and  attracted  a  curious 
crowd,  which  was  constantly  fed  from  the  passing 
throng. 

The  Clearing  House  report  for  the  twenty-ninth  of 
August — the  first  after  the  suspension  of  the  Ohio 
Life  Insurance  and  Trust  Company — showed  a  reduc- 
tion of  four  millions  of  dollars  in  the  bank  loans 
during  the  previous  week. 

The  most  substantial  securities  of  the  market  fell 
rapidly  in  price  at  public  sale. 

The  safety  of  bank  notes  in  circulation  was  sus- 
pected or  denied.  The  publishers  of  counterfeit 
detectors  spread  alarm  among  the  shopkeepers  and 
laborers,  by  selling  handbills  with  lists  of  broken 
banks,  which  were  cried  about  the  streets  by  boys,  at 
"  a  penny  a  piece." 

One  of  the  Associated  Banks  fell  into  default  at 
the  end  of  August,  and  a  fraud  of  seventy  thousand 
dollars  by  the  Paying  Teller,  roused  suspicion  of 
similar  misconduct  in  other  institutions. 

The  regular  discount  of  bills  by  the  banks  had 
mostly  been  suspended,  and  the  street  rates  for  money, 
even  on  unquestionable  securities,  rose  to  three,  four 
and  five  per  cent  a  month.  On  the  ordinary  securi- 
ties of  merchants,  such  as  promissory  notes  and  bills 
of  exchange,  money  was  not  to  be  had  at  any  rate. 

15* 


340  THE   PANIC. 

House  after  house  of  high,  commercial  repute  suc- 
cumbed to  the  panic,  and  several  heavy  banking  firms 
were  added  to  the  list  of  failures. 

The  settlements  of  the  Clearing  House  were  watched 
with  the  expectation  of  new  defaults  ;  and  their  suc- 
cessful accomplishment,  each  day,  was  a  subject  of 
mutual  congratulation  among  bank  officers. 

The  statement  of  the  city  banks  for  the  week  ending 
September  5th,  showed  a  further  reduction  in  the  loans 
of  more  than  four  millions  of  dollars. 

Commercial  embarrassments  and  suspension  became 
the  chief  staple  of  news  in  all  the  papers  of  town  and 
country.  The  purchase  and  transportation  of  produce 
almost  entirely  ceased. 

From  this  period,  there  was  nothing  wanting  to 
aggravate  the  common  distress  for  money.  The  failure 
of  the  Bank  of  Pennsylvania,  in  Philadelphia,  was 
followed  by  that  of  the  other  banks  of  that  city,  and 
by  those  of  Baltimore,  and  of  the  Southern  Atlantic 
States  generally.  Commercial  business  was  every- 
where suspended.  The  avalanche  of  discredit  swept 
down  merchants,  bankers,  moneyed  corporations,  and 
manufacturing  companies,  without  distinction.  Old 
houses,  of  accumulated  capital,  which  had  withstood 
the  violence  of  all  former  panics,  were  prostrated  in  a 
day ;  and  when  they  believed  themselves  to  be 
perfectly  safe  against  misfortune. 

The  bank  suspension  of  New  York  and  New 
England,  in  the  middle  of  October,  was  the  climax  of 
this  commercial  hurricane. 

Such  is  the  outline  of  the  most  extraordinary, 
violent,  and  destructive  financial  panic  ever  experi- 


CONCEALED   CAUSES.  347 

enced  in  this  country.  What  caused  it?  To  what 
source  or  sources  can  it  be  traced  ?  Where  lies  the 
responsibility  of  it?  What  lessons  does  it  teach? 
What  preventives  are  indicated  against  the  recurrence 
of  similar  disaster?  These  are  questions  which 
agitate  the  public  mind,  and  which  ought  to  be 
answered,  if  possible,  for  our  instruction  and  future 
guidance. 

A  financial  panic  has  been  likened  to  a  malignant 
epidemic,  which  kills  more  by  terror  than  by  real 
disease.  If  its  exact  causes  could  be  ascertained,  they 
would  doubtless  be  found  in  minor  proportion  with 
the  imaginary  and  the  accidental ;  but  so  many  terms 
enter  into  the  case,  which,  from  their  character,  are 
beyond  our  grasj),  and  equally  beyond  estimate,  that 
a  clear,  practical  analysis  is  impossible.  For  example : 
Who  can  tell  how  much  gold  is  hoarded — how  much 
of  what  has  been  supposed  to  be  real  capital,  is 
nominal  or  mortgaged — how  much  insolvency  has  been 
buoyed  up  for  years  on  the  general  tides  of  credit — and 
to  what  extent  dishonest  people  take  advantage  of  the 
common  distress,  to  repudiate  debts  which  they  are 
able  to  pay  ?  Who  can  tell  what  frauds  are  carried 
along  in  stock  companies,  or  what  speculations  in  land, 
mines,  and  railways  are  mixed  up  in  the  mass  of 
trade?  On  these  points,  the  sharpest  scrutiny  is 
wholly  at  a  loss.  In  truth,  the  egg  of  the  crisis  of 
1857  was  buried  where  it  could  not  be  seen — in  the 
private  and  household  accounts  of  individuals.  The 
relation  of  the  exports  and  imports  of  a  country  is 
comparatively  of  little  consequence,  so  long  as  its 
home  trade  and  labor  is  in  a  sound  condition.    It 


348 


THE  PAISnO. 


signally  failed  in  this  instance,  to  give  warning  of  the 
approaching  storm,  if  it  did  not  sadly  mislead  those 
who  most  relied  on  it  for  instruction. 

A  state  of  crisis,  or  severe  financial  pressure,  is  not 
necessarily  destructive  of  all  confidence.  "We  have 
been  accustomed  to  its  frequent  recurrence,  and  found 
it  to  be  manageable  without  excessive  straining  of  our 
financial  means.  The  loans  have  uniformly  declined 
from  the  highest  point,  in  August,  to  their  lowest,  in 
November  or  December,  and  the  stringency  has  then 
gradually  relaxed.  This  annual  pressure  may  be 
compared  to  a  high  Spring  wind,  which  breaks  the 
superfluous  growth  of  vegetation,  and  gives  stronger 
development  to  the  uninjured  mass.  The  following 
table  shows  that  stringency  in  the  market,  more  or 
less  severe,  is  not  inconsistent  with  a  prosperous  state 
of  commerce. 


1853,  Aug.  6  to  Nov.  12, 

1854,  "     5  "  Dec.     9, 

1855,  "   18  "  Nov.  17, 

1856,  "     2  "  Nov.    8, 


Eeduction  op 


Loans. 


84 
100 

78 
84 


15,000,000 

13,000,000 

9,000,000 

9,700,000 


Deposits  &     Specie, 
Circulation. 


1,600,000 
16,800,000'4,000,000 
12,200,000  3,300,000 
15,800,000|2,800,000 


Increase  of 
Specie. 


3,000,000 


The  rate  of  reduction  in  loans  was  very  gradual  in 
each  of  the  four  years  preceding  1857.  The  greatest 
fall  for  any  week  during  the  entire  period  was 
$2,800,000,  from  October  7  to  October  14,  1854,  and 
for  the  several  previous  weeks  it  was  hardly  appreci- 
able. The  characteristic  feature  of  this  annual 
contraction  was  an  almost  insensible  ebb :  and  this 


OraO   LIFE   AND   TKITST  CO.  349 

was  frequently  relaxed  to  suit  the  convenience  of 
dealers,  as  is  manifest  from  an  examination  of  the 
weekly  tables. 

It  is  clearly  shown  that  a  reduction  of  loans  of  from 
ten  to  fifteen  millions  of  dollars  may  take  place  in  an 
amerage  term  of  ninety  days  without  serious  injury  to 
couiTnerce. 

Is  there  sufficient  reason  for  assumingthat  this  scale 
of  contraction  might  not  have  been  as  successfully 
applied  in  1857,  as  it  was  in  1853 — or  that  it  might 
not  have  been  extended  several  millions  of  dollars 
beyond  that  of  the  latter  year,  if  the  emergency 
had  required  it  ?  This  is  the  point  about  which 
opinions  clash.  The  best  evidence  bearing  upon  it  is 
to  be  found  in  the  same  tables. 

The  bank  contraction  began  on  the  eighth  of  August, 
and  continued  for  two  weeks  on  the  gradual  scale  of 
former  years.  This  brings  us  to  the  twenty-third  of 
the  month,  on  which  day  the  commercial  interest  was 
undisturbed  by  any  extraordinary  accidents  or  appre- 
hensions. 

On  the  twenty-fourth  of  August,  the  Ohio  Life 
Insurance  and  Trust  Company — a  chartered  institu- 
tion with  banking  privileges — closed  the  doors  of  its 
branch  office  in  New  York.  It  was  not  a  bank  of 
issue,  nor,  to  any  considerable  extent,  of  deposit,  in 
this  city.  Its  principal  business  was  to  receive  remit- 
tances from  the  home  office  in  Cincinnati,  and  numer- 
ous correspondents  in  the  West,  and  to  hold  them 
subject  to  draft.  It  was  not  a  discounter  of  bills 
receivable ;  but  on  the  contrary,  a  large  borrower  from 
other  institutions.    The  consequences  of  its  stoppage, 


350  THE   PANIC. 

therefore,  did  not  fall  directly  on  our  merchants,  as 
in  the  case  of  a  bank  on  which  they  are  depending 
for  continuous  loans.  The  capital  of  the  company 
was  two  millions  of  dollars. 

The  general  circumstances  of  this  failure,  so  far  as 
they  were  published,  were  not  in  themselves  very 
alarming.  The  home  office  was  reported,  by  tele- 
graph, to  have  its  doors  open  as  usual,  with  its  affairs 
apparently  unembarrassed,  notwithstanding  the  stop- 
page of  the  New  York  branch.  It  was  soon  known, 
however,  that  the  entire  capital  of  the  institution  had 
been  virtually  embezzled,  and  serious  alarm  was 
immediately  manifested  in  banking  circles. 

On  the  day  after  the  failure,  our  merchants  found 
that  the  terms  of  business  between  them  and  the 
banks  were  changed.  The  discounting  of  commercial 
paper  was  stopped.  The  certification  of  checks  was 
imposed  with  unaccustomed  rigor.  It  suddenly 
dawned  on  financial  managers,  that  the  city  loans 
were  ten  millions  of  dollars  higher  than  ever  before — 
a  very  gratifying  fact  during  their  accession,  but  now 
inspiring  only  fear  and  distrust,  which  in  a  few  hours, 
comparatively,  ripened  into  symptoms  of  alarm. 

The  "Weekly  Statement  of  August  29th  showed  a 
reduction  in  the  loans  of  four  millions  of  dollars,  and 
that  of  September  5th  as  much  more.  This  unmistak- 
able indication  of  the  course  of  bank  policy  was  every 
where  accepted  as  evidence  of  existing  panic.  Who 
should  know  better  than  bank  managers  how  much 
consequence  to  give  to  the  failure  of  the  Ohio  Life 
and  Trust  Company  ?  They  were  terrified  by  the 
stupendous  fraud.    They  saw  no  safety,  but  in  com- 


OHIO   LIFE  AST)  TRUST  CO.  361 

pelling  the  payment  of  their  loans  at  maturity,  and 
denying  all  indulgence.  The  gradual  scale  of  reduc- 
tion was  abandoned  at  once.  Instead  of  ten  millions 
of  dollars  in  eighty-four  days,  it  was  ten  millions  in 
fourteen  days.  Whether  this  was  forced  on  the  banks 
by  the  withdrawal  of  deposits,  or  whether  it  was  the 
result  of  a  common  understanding,  or  of  the  want 
of  such  understanding  on  the  part  of  bank  oflBcers,  is 
of  little  importance,  so  far  as  relates  to  its  effect  on 
the  public  mind.  Its  immediate  sequence  to  the 
collapse  of  the  Trust  Company  gave  to  that  event  the 
distinction  of  the  first  act  in  the  panic  of  1857.  The 
institution  had  stood  high  in  the  public  esteem  for  a 
number  of  years.  It  was  regarded  as  the  more  safe, 
because  it  was  not  a  bank  of  issue,  and  because  its 
affairs  were  supposed  to  be  conducted  on  the  con- 
servative plan  of  our  Trust  Companies,  avoiding  the 
active  and  changeable  risks  of  commerce,  or  touch- 
ing them  only  with  extreme  caution.  The  bankers 
and  exchange  dealers  of  Ohio  bought  its  drafts  for 
remittance  very  extensively;  and  the  immediate 
injuries  caused  by  its  failure  arose  from  these  being 
dishonored  at  New  York,  where,  for  several  successive 
days,  they  accumulated  in  the  hands  of  many  parties, 
to  the  extent  of  several  hundred  thousand  dollars. 
There  was  not  a  bank  in  the  city,  with  a  Western  cor- 
respondence, that  had  not  these  drafts  sent  to  them  in 
payment  for  collections,  or  for  deposit,  to  be  drawn 
against  by  the  remitters.  The  sensible  consequences 
of  the  failure  were,  therefore,  widely  distributed, 
especially  among  the  city  banks,  several  of  which 
were  large  lenders  to  the  Company.    The  Company 


352  TBE  PAmo. 

had  borrowed,  also,  of  individual  bankers,  exchange 
dealers,  and  stock  brokers,  hypothecating  not  only  its 
own  collaterals,  but  the  property  of  its  dealers,  for 
whom  it  was  merely  a  collecting  agent.  Most  per- 
sons who  held  claims  against  it  were  persuaded  that 
they  would  be  lessened  in  value  by  an  untimely 
exposure  of  its  affairs,  and  a  curtain  of  mystery  was 
thus  drawn  before  them. 

The  quick  apprehension,  by  bank  managers,  of  the 
dangers  to  which  our  financial  system  is  exposed  by 
the  loss  of  public  confidence,  their  knowledge  of  the 
facility  with  which  frauds  may  be  concealed  and 
propagated  in  large  institutions,  and  the  immediate 
reflection  of  the  consequences  upon  the  banks,  explain 
why  they  so  promptly  take  the  alarm  when  any  mate- 
rial part  of  the  fabric  of  credit  gives  way.  They 
were  the  first  to  seize  and  to  act  upon  the  sugges- 
tions which  were  provoked  by  the  sudden  collapse 
of  the  Ohio  Trust  Company.  If  its  entire  capital  of 
two  millions  of  dollars  could  be  dissipated — if  its 
means  could  be  employed  in  desperate  stock-gam- 
bling in  the  public  market,  with  all  the  usual  hypoth- 
ecation of  securities,  and  transfers,  and  extensive  bank 
loans,  of  which  the  records  of  the  Company  must 
have  given  some  evidence — all  this  without  discovery, 
and  even  without  exciting  suspicion  in  the  minds  of 
the  trustees — why  might  not  similar  transactions  be 
concealed  in  other  institutions  of  which  the  trustees 
are  equally  well  accomplished  and  esteemed  ?  Under 
the  fears  instigated  by  such  thoughts,  the  manifesta- 
tions of  distrust  were  more  open  from  day  to  day. 
The  notes  of  houses  in  high  standing  were  rejected 


BANK   STRICTURE.  353 

-when  presented  for  payment  in  the  usual  manner, 
unless  the  deposit  to  cover  them  was  already  made. 
The  most  trivial  accommodations  were  denied,  with  a 
positiveness  that  sent  the  applicant  away  dissatisfied 
and  indignant.  All  the  forms  of  suspicion  were 
thrust  out  into  a  prominence  that  was  not  unfre- 
quently  insulting.  The  honor  of  the  best  dealers, 
who  had  never  committed  an  impropriety  in  their 
accounts,  was  totally  ignored.  Good  faith  and  confi- 
dence disappeared  from  the  bank  counters,  under  the 
rigid  instruction  of  the  officers ;  and  personal  inter- 
course with  them  became  difficult,  without  such  delays 
and  exposures  as  were  offensive  to  high-minded  and 
honorable  men.  Stocks  held  as  collateral  security 
were  marked  down  in  value  from  ten  to  thirty  per 
cent ;  and  successive  instalments  on  loans  were 
required  to  restore  the  continuous  depreciation  caused 
by  this  process.  All  these  hard  points  were  pushed 
out  with  such  disregard  of  the  trying  necessities  of  the 
dealer,  that  a  common  feeling  of  indifference  to  obli- 
gations began  to  spring  up  as  their  counterpart. 

It  is  remarkable  that  there  was  no  interval  of  pres- 
sure between  the  plentiful  money-market,  which 
lasted  until  the  twenty-second  of  August,  and  the 
panic  with  which  the  month  closed.  There  was  no 
treaty  between  commerce  and  money  as  to  the  com- 
mon interest.  The  panic  was  an  explosion  without 
notice  or  premonition.  It  was  not,  as  in  former  cases, 
the  result  of  gradually  increasing  embarrassment 
after  vain  struggles  to  prevent  it.  This  is  demon- 
strated by  the  following  figures : 


354  THE  PAino. 


WeeTcly  Fluctuation  of  Loaiis^  Deposits^  Circulation 
and  Specie^  from  Aug.  22d  to  Sept.  26th,  1857. 


Loads. 


Depositb. 


CrECULATION. 


Specie. 


Aug.     29'dec.  S3,550,e63'dec.  8,380,67o'dec.  22,95l|dec.     855,802 

Sept,      5'dec.  4,367,554'dec.  3,600,192inc.  2,132:inc.      986,588 

"       12'dec.  2,235,792|inc.  73,512dec.*  350,876,inc.  1,953,893 

"       19'dec.  l,208,152;inc.  517,844'dec.  248,515inc.  1,874,329 

"      26jdec.  985,988dec.  933,102jdec.  235,493|dec.     229,091 

Idee.  12,348,149|dec.  7,322,608|dec.  855,703'inc.  3,229,917 


The  deposits  and  circulation  are  the  basis  of  the 
loans  and  specie. 

The  exact  loss  of  basis,  during  this  term,  was 
$8,178,311,  while  the  loans  were  reduced  $12,348,149. 
The  increase  of  specie  reserved  from  the  liquidations 
makes  the  true  relative  decrease  $15,578,066.  The  most 
violent  action  was  between  September  5th  and  Sep- 
tember 19th,  when  the  loans  were  reduced  $3,443,944, 
in  the  face  of  an  increase  of  deposits  of  nearly  six 
hundred  thousand  dollars.  In  the  latter  period,  the 
true  relative  change  is  represented  by  a  reduction  of 
$6,172,775  in  the  loans,  while  the  deposits  actually 
increased  $591,356. 

There  can  be  no  escape  from  these  figures.  They 
show,  beyond  cavil,  that  the  hanks,  not  the  depositors, 
took  the  lead  in  forcing  liquidation.  In  the  twenty 
days  prior  to  the  26th  of  September,  the  deposits  fell 
off  but  $341,746,  while  the  resources  of  the  banks 
were  increased  $6,694,179. 

An  important  fact  must  be  stated  in  connection 
with  the  fall  of  deposits  between  August  22d  and 


baitk:  stkicture.  355 

September  26th,  viz.,  that  of  the  $7,322,608,  full 
three-fourths  was  drawn  out  by  the  country  banks ; 
so  that  the  amount  withdrawn  by  the  individual 
dealers  was,  at  most,  not  above  two  millions  of  dol- 
lars. Thus,  the  consequences  of  holding  a  treacherous 
country  fund  on  interest^  and  treating  it  as  bank 
capital,  fell  ultimately  on  our  city  merchants. 

When  dealers  are  denied  the  usual  facilities  by 
discount,  they  have  no  recourse  for  their  payments  but 
to  their  deposits ;  but  they  did  not  use  these  to  the  full 
extent  of  their  loan  reduction  in  any  single  week 
from  the  22d  of  August  to  the  19th  of  September. 

The  fluctuating  part  of  the  basis  of  bank  loans  is 
composed  of  deposits  and  circulation — the  capital 
being  a  permanent  investment  by  the  stockholders. 
The  force  of  reduction  is,  therefore,  measurable  by 
the  proportion  between  this  fluctuating  basis,  and  the 
amount  of  loans  above  the  capital.  It  is  this  propor- 
tion which  constitutes,  at  the  same  time,  the  profit 
and  the  danger  of  our  banking  system.  For  example  : 
the  capital  of  the  banks  was  $65,000,000  on  the  22d 
of  August.  Deducting  this  from  the  loans  of  that 
date,  $120,139,582,  gives  $60,139,582  as  the  propor- 
tion resting  on  the  deposits  and  circulation,  which 
then  amounted  to  $72,935,482.  The  proportion  of 
loans  on  this  fluctuating,  or  pure  credit  basis,  was 
eighty  per  cent.  The  same  percentage  on  the  deposits 
and  circulation  of  September  26th,  would  have  given 
the  dealers  an  aggregate  loan  of  $51,805,737 ;  whereas, 
they  had  but  $42,791,433— a  deficiency  of  $9,014,304, 
relatively,  with  the  resources  of  the  banks.  The  loss 
of  basis,  by  the  decrease  of  circulation  and  the  dimi- 


356  THE  PAino. 

nution  of  deposits,  was  but  eleven  per  cent,  while  the 
reduction  of  loans  was  twenty-nine  per  cent. 

This  method  of  estimating  the  force  of  a  financial 
contraction,  by  taking  into  view  the  fluctuating  basis 
only,  exposes  the  real  danger  of  extending  loans  on 
that  basis  beyond  the  point  which  experience  has 
determined  as  safe.  It  is  the  true  scale  of  measure- 
ment for  the  guidance  of  the  Bank  Board. 

"  The  sudden  withdrawal  of  country  balances"  has 
been  assumed  as  the  chief  cause  of  the  panic,  by  some 
of  our  principal  bank  officers.  The  Clearing  House 
tables  give  no  support  to  this  assumption.  No  fea- 
ture of  our  financial  system  is  more  remarkable  than 
the  stability  of  its  deposit  line.  The  monthly  average 
for  1857  is  directly  to  the  point.    It  is  as  follows  : 

January $65,638,204 

February 65,416,635 

March 65,948,462 

April       67,135,655 

May 68,342,291 

June 68,336,935 

July 66,369,206 

August  Ist  to  August  22d  .     .  66,777,857 

This  brings  us  to  the  exact  date  of  the  panic,  with 
60  little  fluctuation  of  deposits,  that  the  loans  were 
not  more  afiected,  from  week  to  week,  than  is  usual 
in  the  best  condition  of  our  market. 

But  we  have  direct  testimony,  on  this  part  of  the 
subject,  in  the  Eeport  of  the  Clearing  House  Com- 


COtTESE  OF  THE  MARKET.  357 

mittee,  to  whom  was  referred  the  proposition  to 
abolish  the  payment  of  interest  on  deposits. 

They  say,  on  page  17  :  "  During  the  week  of  finan- 
cial excitement,  in  October  last,  the  exaggerated 
reports  of  which  were  carried  with  the  speed  of  light- 
ning to  every  part  of  the  land,  this  new  medium  of 
communication  (the  telegraph)  filled  our  banks  with 
imperative  orders  for  the  immediate  return  of  their 
deposits,  in  specie." 

It  was  not,  then,  until  October,  that  the  with- 
drawal of  deposits  operated  so  fatally  ! 

The  point  implied  by  the  Committee  is,  that  the 
panic  occurred  in  October ;  and  the  purpose  of  the 
implication  is,  to  shift  the  responsibility  of  having 
caused  it,  from  the  banks  to  the  depositors.  There  is 
no  evidence  to  sustain  this  presumption.  The  Bank 
Superintendent  says,  in  his  report  to  the  Legislature, 
"  that  about  the  first  of  October,  a  list  of  more  than 
thirty  failed  banks,  in  the  State  of  New  York,  was  to 
be  seen  daily  in  our  newspapers."  He  says,  also, 
that  the  interior  banks  began  to  return  their  circula- 
tion, and  to  withdraw  their  securities,  for  sale,  about 
the  20th  of  September — an  extremity  of  action  that 
does  not  characterize  a  state  of  ordinary  pressure. 
The  weaker  banks  began  to  fail  near  the  first  of  Sep- 
tember ;  and  the  commercial  failures  of  the  early  part 
of  that  month,  were  largely  of  a  class  that  had  with- 
stood all  former  panics. 

A  comparison  of  the  stock  sales  from  August  22d  to 
September  30th,  with  those  of  the  "  week  of  financial 
excitement  in  October,"  further  refutes  the  theory  of 
the  panic  set  up  by  the  Clearing  House  Committee. 


^58 


THE  PANIC. 


RELATIVE   DECLINE  IN  BONDS   AND   STOCKS. 


Fkom  Aug.  22 
TO  Oct.  1. 

Feom  Oct.  1 
TO  Oot.  13. 

Virginia  State  Sixes 

13i  per  cent. 
11         do. 

32  do. 
18          do. 
19i       do. 
16         do. 

16  do. 
22i        do. 
40i        do. 

33  do. 
26          do. 
20          do. 
36^        do. 
37          do. 
21f        do. 
32^        do. 

17  do, 
25          do. 
3U        do. 
15i        do. 
36          do. 
20f        do. 
llf        do. 

10    per  cent. 
8          do. 

Missouri  State  Sixes 

Illinois  Central  Railroad  Bonds 

New  York  Central  Railroad  Sixes 

do.                     do.            Stock ... 

Delaware  k  Hudson  Canal  Company 

Bank  of  America 

16          do. 

4  do. 

5  do. 
24         do. 
19          do. 

Bank  of  Commerce 

13          do. 

American  Exchange  Bank 

Metropolitan  Bank 

loi        do. 

17          do. 

Park  Bank 

18          do. 

Panama  Railroad 

10          do. 

Reading  Railroad ■ 

3i        do. 
6          do. 

Michigan  Central  Railroad 

Michigan  Preferred  Railroad 

0          do. 

Illinois  Central  Railroad 

9^        do. 
3          do. 

New  York  &  Erie  Railroad 

Galena  &  Chicago  Railroad 

9          do. 

Chicago  &:  Rock  Island  Railroad 

Cleveland  &  Toledo  Railroad 

3i        do. 
7i       do. 

0  do. 

1  do. 
15i        do. 

Milwaukie  &  Mississippi  Railroad 

Cleveland  &  Pittsburgh  Railroad 

Pennsylvania  Coal 

The  foregoing  list  includes  a  wide  range  of  securi- 
ties, from  the  best,  down  to  what  are  called  "  fancy." 
The  general  decline  of  the  market  was -from  three  to 
thirty-six  per  cent  more  between  August  22d  and 
October  Ist,  than  it  was  during  "  the  week  of  finan- 
cial excitement  in  October."  It  is  apparent  that 
the  latter  period  was  but  the  sequence  of  the  former 
— the  breaking  away  of  the  dykes,  when  the  pressure 
of  the  flood  became  irresistible.  The  ball  had  been 
set  in  motion,  and  it  was  impossible  to  stop  it  on  the 
side  of  a  hill. 


OAU.  LOANS.  359 

Although  the  assumption  that  the  panic  was  caused 
hj  the  sudden  withdrawal  of  country  balances  is  not 
borne  out  by  the  tables,  it  is  true  that  those  balances 
constituted  a  bad  element  in  the  market,  and  that 
they  contributed  to  the  common  wreck.  The  pre- 
sence in  our  financial  system  of  a  borrowed  fund, 
payable  on  demand,  of  fifteen  millions  of  dollars,  on 
which  loans  were  predicated,  was  a  disturbing  fact, 
even  with  the  probability  that  it  was  not  likely  to  be 
withdrawn  suddenly,  or  all  at  a  time.  But  the  con- 
ditions on  which  it  was  held  prohibited  that  state  of 
preparation,  which  alone  could  protect  the  market 
from  the  injuries  of  a  requisition  for  immediate 
payment.  It  carried  interest ;  it  was  reloaned  on 
interest,  and  doubtless  re-reloaned  to  various  parties, 
who  had  invested  it,  perhaps  mostly  in  the  hazard- 
ous speculations  of  the  stock  market.  K  the  coun- 
try banks,  which  were  borrowers  No.  1,  were  called 
on  by  their  depositors,  they  called  on  the  city 
banks,  which  were  borrowers  No.  2 ;  and  these 
called  on  the  large  broker,  who  was  borrower 
No.  3 ;  and  he  again  on  the  small  brokers,  who  were 
borrowers  No.  4,  in  whose  hands  the  money  spread 
out  into  various  channels  of  fluctuating  investment, 
if  it  was  not  further  loaned  to  a  fifth  series  of  borrow- 
ers. The  difficulty  of  collecting  loans  is  in  propor- 
tion to  the  number  of  borrowers  between  the  first  and 
the  last.  The  city  banks  do  not  commonly  "  call  in," 
until  they  have  paid  drafts  against  the  fund,  and  they 
are  likely  to  be  left  a  day  or  two  in  the  lurch  before 
they  can  restore  themselves  —  meanwhile  falling 
behind  at  the  Clearing  House,   or  denying  usual 


360  THE   PANIC. 

accommodation  to  their  commercial  dealers.  This  is 
the  literal  history  of  the  "call  loans"  of  the  city 
banks,  and  the  only  management  by  which  they  can 
reimburse  themselves  for  the  interest  which  they  pay 
on  borrowed  money.  The  committee  justly  denounce 
the  practice  as  "  a  departure  from  sound  principles." 
They  show  that  it  reflects  injury  on  the  whole  com- 
munity, while  the  profit  is  confined  to  a  few  banks, 
and  is  inconsiderable  at  best ;  also  that  it  accumulates 
balances  beyond  the  necessities  of  a  healthy  exchange, 
and  withdraws  capital  from  productive  employment 
in  the  country. 

It  is  not  to  be  doubted,  that  the  "  imperative 
orders"  from  the  country  banks,  together  with  the 
action  of  the  home  depositors,  did  cause,  directly,  the 
suspension  of  specie  payments.  It  is  impossible  to 
ascertain  how  much  they  contributed,  separately,  to 
the  final  result,  though  appearances  indicate  that 
country  depositors  had  less  to  do  with  it  than  the 
resident  dealers. 

The  balances  of  the  foreign  bankers  had  accumu- 
lated, in  consequence  of  the  stoppage  of  specie  ship- 
ments, and  the  non-sale  of  bills  of  exchange.  These 
were  understood  to  be  specialized  by  agreement  with 
the  bank  ofiicers.  That  is,  they  were  either  to  be 
reserved  in  coin,  or  the  owners  were  to  be  advised  in 
season,  that  they  might  withdraw  them  before  the 
suspension  of  specie  payments.  The  tables  show  that 
seven  millions  were  withdrawn  between  the  tenth  and 
the  seventeenth  of  October — the  greater  part  of  it, 
probably,   on  the  morning  of  the  suspension.     The 


THE   FINAI.  BLOW.  361 

next  week  bronglit  it  all  back  again.  The  restoration 
of  the  specie  line  was  even  more  remarkable  than  its 
depletion.  A  single  glance  at  the  diagram  will 
excite  astonishment  at  the  resources  that  were  found 
immediately  available  ;  and  still  more  astonishment, 
that  suspension  could  have  occurred  while  they  were 
within  such  speedy  grasp. 

The  relative  decline  in  loans  and  deposits,  from 
September  26th  to  October  17th,  covering  the  period 
referred  to  by  the  Committee,  was  as  follows  : 


Oct.    3  .    . 
«    10  .    . 
«    17  .    , 

Loaris. 

.     .     $1,855,934 
,     .      4,017,929 
.     .      4,671,744 

Deposits. 

$4,120,498 
3,053,189 
7,049,164 

$10,545,607 

$14,222,851 

Besides  this  loss  in  deposits,  the  banks  suffered 
depletion  in  coin  to  the  amount  of  $5,483,864,  They 
could  not  withstand  such  an  onslaught.  In  twenty-one 
days,  the  deposits  fell  twenty-five  per  cent,  while  the 
loans  were  reduced  but  eleven  per  cent — a  complete 
transposition  of  the  movement  following  the  22d  of 
August,  when  they  fell  but  eleven,  while  the  loans 
decreased  twenty-nine  per  cent. 

The  history  of  the  panic  is  clearly  divisible  into 
these  two  periods  :  the  former,  when  the  banks  took 
the  initiative  in  forcing  down  their  loans ;  and  the 
latter,  in  which  the  depositors  seized  it  and  brought 
on  the  closing  act  of  suspension. 

16 


362  THE   TANIC. 

The  depositors  were  not  alarmed,  up  to  the  26th  of 
September.  For  five  successive  weeks,  preceding, 
they  withdrew  less  from  the  banks  each  week  than 
the  banks  withdrew  from  them  by  the  depression  of 
loans.  So  far  from  exhibiting  distrust,  there  is  every 
appearance  of  striving  against  it  on  their  part,  with 
the  hope  that  the  storm  might  pass  its  crisis,  and  sub- 
side. The  united  community  will  testify  to  the 
anxiety  with  which  the  Clearing  House  Reports  were 
watched,  for  signs  of  relaxation  in  the  forced  contrac- 
tion ;  but  no  such  signs  were  given.  At  length,  the 
third  of  October  exhibits  a  sudden  and  marked 
change.  Over  four  millions  of  deposits  are  withdrawn 
during  a  single  week,  and  in  twenty  days,  over  four- 
teen millions.  It  is  probable  that  a  much  larger 
amount  was  withdrawn  up  to  the  fom'teenth  (the  day 
of  suspension)  than  is  indicated  by  the  statements ; 
for  these  do  not  show  the  restoration  which  began  on 
the  fifteenth,  and  which  materially  lessened  the 
average  of  withdrawal  for  the  week  ending  on  the 
seventeenth.  The  report  of  the  Clearing  House  Com- 
mittee confirms  the  fact  that  the  depositors  did  not 
become  alarmed  before  this  period. 

The  gradual  expansion  of  bank  credits  through  the 
several  previous  years,  not  only  on  a  fictitious  home 
basis,  but  on  country  deposits  which  had  been 
allured  by  competing  rates  of  interest,  made  suffi- 
cient ground  for  an  extraordinary  pressure,  when  a 
reduction  was  to  be  effected ;  and  thus  the  banks 
were  doubly  responsible  for  the  pending  issue.  Tliere 
is  no  evidence,  however,  in  the  records  of  the  Clear- 
ing House,  nor  in  the  experience  of  past  years,  nor  in 


THE   CAUSE.  363 

any  events  which  have  transpired  since  the  suspension, 
to  prove  that  a  panic  was  inevitable.  The  foregoing 
facts  indicate  that  it  was  directly  caused  by  the  mo- 
lent  contraction  of  iank  loans  imrnediately  after  the 
twentyfourth  of  August. 

The  beginning  of  the  contraction  on  the  twenty- 
fifth  of  August,  marks  the  precise  point  at  which  the 
panic  was  started  on  its  destructive  course.  From 
that  date,  distrust  grew  rapidly.  The  telegraph 
spread  it  throughout  the  country.  Every  latent 
cause  of  embarrassment  sprung  into  activity.  Trifling 
causes  were  a  thousand-fold  magnified.  False  alarms 
were  created,  and  public  apprehension  kept  up  by 
successive  disasters.  Unusual  accidents  were  added 
to  excite  the  popular  mind.  For  the  first  time  since 
the  establishment  of  regular  intercourse  with  Cali- 
fornia, the  steamers  were  delayed  with  their  remit- 
tances of  gold ;  and  one  of  them  was  lost. 

In  this  state  of  things,  the  Clearing  House  daily 
settlements  in  coin  exerted  a  crushing  influence  on 
the  commercial  interest,  and  became  a  new  source 
of  terror.  What  in  ordinary  times  was  a  safe-guard 
against  the  unwise  expansion  of  bank-credits,  was 
now  a  remorseless  power  compelling  the  smaller 
banks — the  majority  of  the  whole — to  a  violent  con- 
traction of  their  loans  to  dealers,  forcing  them  into 
the  sacrifice  of  property,  and  finally  into  bankruptcy ; 
thus  sending  out  through  a  thousand  channels  daily, 
new  streams  of  misfortune.  Default  at  the  Cleanng 
House,  was  the  presiding  spectre  at  every  Bank  Board 
of  the  smaller  institutions.    It  was  forgotten  that  the 


364  THE   PANIC. 

whole  of  a  thing  is  composed  of  its  parts — that  public 
credit  is  made  up  of  the  credit  of  individuals — that 
if  the  parts  of  a  thing  are  broken  and  scattered,  there 
is  no  longer  a  whole."'^ 

It  did  not  occur  to  the  managing  committees  of 
the  Clearing  House  to  relax  its  destructive  energy, 
whilst  there  was  yet  a  chance  of  preserving  the  last 
stronghold  and  pledge  of  commercial  integrity — specie 
payments.  They  thought  of  it  afterwards,  and  found 
in  it  a  wholesome  alleviation  for  themselves ;  but  the 
time  had  passed  for  it  to  be  of  any  material  service 
to  our  merchants.  The  admission  of  the  State  debt 
of  New  York,  and  of  the  debt  of  the  United  States, 
represented  by  the  bank  currency,  as  a  substitute  for 
coin  in  the  daily  settlements,  was  of  great  service  in 
preventing  further  depreciation,  and  in  repairing  the 
mischief  that  had  been  done. 

It  is  often  the  case,  that  things  good  in  themselves 
become  hurtful  by  a  change  of  circumstances  which 
destroys  their  fitness.  This  may  be  said  of  the  Clear- 
ing House,  without  detracting  from  its  real  value  to 
our  financial  interests. 

There  are  always  operating  causes  in  commercial 
and  financial  affairs,  of  which  any  violent  disturbance 
may  be  made  to  appear  as  the  consequence,  after  the 
issue  is  over ;  but  which,  nevertheless,  may  have  had 
no  actual  share  in  its  production.  Thus,  the  advocates 
of  a  protective  tariff  see  in  low  duties  on  foreign 

*  "All  community  of  interest,  aU  concert  of  action,  as  the  crisis  approached,  was 
apparently,  if  not  actually  abandoned." — Report  of  Bank  Superintendent,  p.  7. 

"The  suspension  was  preceded  by  a  desperate  struggle  between  all  the  banks 
themselves ;  and  distrust  and  fear  of  currency  was  more  apparent  among  them  than 
with  the  public  generally." — Ibid.,  p.  17. 


THE   CHAET.  365 

merchandise  a  primary  and  suflBcient  cause  for  the 
panic  of  1S57;  and  the  "hard  currency"  theorists 
find  its  explanation  in  the  use  of  paper  money.  For- 
tunately, the  figures  of  the  Clearing  House  afford 
such  a  palpable  demonstration  of  a  direct  and  simple 
cause  in  this  instance,  that  all  complicated  questions 
of  political  economy  may  be  left  out  of  view.  Yet, 
it  is  often  important  as  well  as  interesting  to  look 
back  over  the  history  of  things,  and  to  discover,  if 
possible,  the  exact  point  where  judgment  was  lacking, 
and  where  a  slight  tm*n  of  the  rudder  would  have 
saved  the  vessel  from  destruction.  The  chart  con- 
structed from  the  Weekly  Statements  is  instructive 
on  this  point. 

In  August,  1853,  commenced  the  publication  of  the 
"Weekly  Statements;  and  in  October  following,  the 
Clearing  House  was  organized.  The  lines  of  the  chart 
of  that  year  begin  in  a  straggling,  and  apparently 
dubious  manner,  as  if  engaged  in  an  uncertain  experi- 
ment ;  but  they  are  brought  into  complete  harmony 
in  July,  1854,  when  the  influence  of  the  Clearing 
House  is  perfectly  established ;  and  from  this  point 
they  rise  and  fall  together.  During  the  year  ending 
with  July,  1855,  the  specie  was  kept  at  twenty-five 
per  cent  of  the  deposits.  The  evil  of  disjproportionate 
expansion  by  the  banks  separately,  which  was  so 
grievous  before  the  organization  of  the  House,  was 
effectually  cured;  but  afterwards  came  the  evil  of 
harmonious  expansion,  which  was  something  quite 
new,  and  not  contemplated.  The  balance-wheel  was 
perfect  so  far  as  to  prevent  individual  members  going 
astray ;  but  for  want  of  a  fixed  scale^  it  did  not  pre- 


366  THE   PANIC. 

vent  the  whole  from  going  astray  together.  In 
August,  1855,  the  specie  line  fell  below  the  scale,  and 
did  not  again  ascend  to  it  before  the  suspension  in 
October,  1857.  The  transient  recovery  in  February, 
and  in  June,  1856,  was  extraneous  from  the  market, 
being  caused  by  the  payment  of  a  State  loan  at  the 
former,  and  of  a  city  loan  at  the  latter  date.  The 
average  of  specie  with  respect  to  the  deposits,  sunk 
from  twenty-five  per  cent  in  1854-5,  to  twenty-one 
per  cent  in  1855-6,  and  to  eighteen  per  cent  in  1856-7, 
while  the  loans  were  steadily  on  the  increase. 

It  is  held  that  a  fair  proportion  of  the  resources 
of  a  bank  should  be  reserved  in  coin,  to  meet  im- 
mediate liabilities.  The  market  is  uneasy  with  high 
loans  and  low  specie.  Tried  by  this  measurement,  the 
force  of  our  bank  expansion  after  August,  1855,  is 
exhibited  in  a  most  striking  manner.  The  proportion 
of  coin  with  the  whole  resom-ces  for  the  year,  ending 
July  31,  1855,  being  preserved  in  the  subsequent 
years,  would  have  given  but  eighty-five  millions  of 
loans  on  the  actual  coin  of  1855-6,  whereas  they  were 
$100,488,046 ;  and  it  would  have  admitted  but  seventy- 
six  millions  of  loans  on  the  actual  coin  of  1856-7, 
whereas  they  were  $111,174,665.  That  is  to  say,  that 
the  loans  of  1855-6  were  fifteen  millions  of  dollars  in 
excess  of  the  scale,  and  the  loans  of  1856-7  were 
tliirty-jviie  'millions  in  excess !  These  results  are 
astounding.  If  such  a  departure  from  equilibrium 
does  not  foreshadow  the  suspension  of  specie  pay- 
ments as  inevitable,  it  lessens  our  surprise  that  it 
should  have  occurred  (to  borrow  the  words  of  the 
Bank-Superintendent) — "  with  overflowing  granaries. 


BANK   EXPANSION.  367 

exemption  from  pestilence,  neither  internal  insur- 
rection nor  foreign  invasion,  and  our  country  at  peace 
with  every  nation  of  the  earth."  * 

The  chart  shows  that,  in  July  1856,  a  new  gaj)  was 
opened  between  the  loans  and  their  basis.  Tlie  depos- 
its receded,  but  hctTik  expansion  went  on,  in  defiance 
of  this  significant  change  of  current,  and  the  contin- 
ued depression  of  specie  ;  until  on  the  8th  of  August, 
1857,  it  reached  its  highest  point.  The  loans,  then, 
with  respect  to  the  specie  reserve,  were  in  excess 
forty-five  millions  of  dollars  ! 

All  these  movements  are  shown  on  the  reduced 
diagram,  on  which  the  point  of  departure  from  the 
scale  is  indicated  by  straight  lines.  It  is  manifest 
that  the  rules  of  sound  discretion  in  our  bank  manage- 
ment were  lost  sight  of  as  far  back  as  July,  1855 ;  and 
since  the  expansion  was  not  arrested  at  any  subse- 
quent period,  when  it  was  possible,  but  one  result 
could  follow.  In  fact,  it  appears  that  the  escape  from 
panic  in  the  two  previous  years  was  remarkable, 
since  the  excess  of  loans,  with  respect  to  the  specie, 
reached,  on  the  29th  of  September,  1855,  thirty-three 
millions  of  dollars,  and  on  the  27th  of  September,  1856, 
thirty-eight  millions  .of  dollars ! 

The  relative  condition  of  our  city  banks  at  the 
difi*erent  periods  named,  with  their  condition  on  the 
31st  of  July,  1858,  is  strikingly  shown  by  the  amount 
of  loans  that  their  average  reserve  of  specie  would 
have  admitted,  in  the  same  proportion,  viz.  :  two 
hundred  and  thirty-fi/ve  millions  of  dollars  ! 

*  Report  of  1857,  page  4. 


368  THE   PANIC. 

It  is,  doubtless,  the  examination  of  the  whole  ground 
here  set  forth,  that  has  induced  a  majority  of  our 
bank  officers  to  name  arbitrarily  a  proportion  of 
specie,  as  proper  to  be  kept  in  reserve  from  the 
resources.*  The  Bank  Suj)erintendent,  also,  has  recom- 
mended to  the  Legislature,  that  the  banks  be  obliged 
to  maintain  an  average  of  twenty  per  cent  of  their 
deposits  in  coin ;  though  for  want  of  a  more  practical 
acquaintance  with  bank  figures,  he  quotes  their  depos- 
its in  gross  at  $72,602,678,  instead  of  $55,377,224, 
omitting  to  deduct  the  clearings.  It  may  rather  be 
doubted  whether  the  proportion  of  twenty  per  cent 
is  sufficient  to  assure  a  steady  equilibrium.  That  of 
the  years  ending  with  July  in  1854  and  1855,  was 
over  twenty-five  per  cent  of  the  net  deposits,  while 
that  of  1856  was  but  little  below  twenty,  and  that  of 
1857,  eighteen  per  cent. 

■Hie  circulating  bills  may  safely  be  left  out  of  view 
in  this  provision,  as  their  independent  security  has 
been  abundantly  tested. 

AN   EXCEPTION. 

A  very  important  exception  remains  to  be  noticed, 
as  to  a  portion  of  our  city  banks,  in  connection  with 


*  At  a  meeting,  March  16th,  185S,  -where  forty-two  banks  were  represented,  the 
following  resolution  was  adopted: 

Resolved,  That  in  furtherance  of  the  end  proposed  by  our  agreement,  to  discon- 
tinue the  payment  of  interest  on  deposits,  and  in  accordance  with  the  recommend- 
ations of  the  Report  of  the  Committee  on  that  subject,  we  also  agree,  each  to  keep 
on  hand,  at  all  times,  an  amount  of  coin  equivalent  to  not  less  than  twenty  per 
cent  of  our  net  deposits  of  every  kind,  which  shall  be  made  to  include  certified 
checks  and  all  other  liabilities  (except  circulating  notes),  deducting  the  daily 
exchanges  received  from  the  Clearing  House. 


BANKS   NOT   WANTED.  369 

the  expansion  of  credit  whicli  prepared  the  conditions 
of  the  panic. 

From  1839  to  1850,  our  banking  capital  was  in- 
creased but  little  over  three  hundi-ed  thousand  dol- 
lars ;  and  during  these  eleven  years,  more  than  thirty 
per  cent  had  been  added  to  our  commerce  and  popu- 
lation. Unquestionably,  there  was  room  for  some 
additional  banks.  Several  were  organized,  and  soon 
acquired  such  a  prosperous  business,  that  bank  stock 
became  a  favorite  investment.  It  was  so  easy  to 
"  get  up  "  a  bank,  and  its  offices  were  so  respectable, 
that  Tellers  and  Clerks,  who  were  ambitious  to 
become  Cashiers,  called  their  friends  together,  and 
began  subscription-lists.  A  retired  capitalist  was 
flattered  with  an  offer  of  the  Presidency  ;  mechanics 
and  merchants  were  pleased  at  the  idea  of  becoming 
Bank  Directors,  with  the  enjoyment  of  unrestricted 
"  facilities  ;"  lawyers  and  notaries  were  flattered  with 
the  hope  of  counsel  and  protest  fees ;  and  all  joined 
together  to  get  stock  taken.  Scores,  if  not  hundreds, 
of  small  subscription-books  were  in  circulation  at  the 
same  time,  in  all  trades  and  professions.  TJnder- 
clerks  in  old  banks,  who  were  desirous  of  promotion, 
aimed  at  tellerships  in  the  new  institutions,  and 
sought  to  make  claims  by  soliciting  stock ;  sub- 
scribers became  solicitors,  on  condition  of  having 
their  friends  appointed  to  clerkshijDS  ;  brokers  became 
solicitors,  in  view  of  large  commissions  for  the  pur- 
chase of  securities  ;  stationers  were  actively  engaged, 
under  a  promise  of  furnishing  the  ledgers  and  account- 
books  ;  engravers  were  set  to  work,  by  the  promise 
of  employment  in  their  art ;  and  people  in  particular 

16* 


370  THE  PANIC. 

sections  were  stimulated  by  the  prospect  of  increased 
value  to  their  real  estate,  by  the  near  location  of  a 
bank.  In  1851,  a  new  bank  was  started  for  every 
month  in  the  year ;  in  1852,  one  for  every  two 
months  ;  nine  were  added  for  1853 — making  twenty- 
seven  in  three  years,  with  an  aggregate  capital  of 
over  sixteen  millions  of  dollars.  If  this  had  been 
real  capital,  the  case  had  been  better ;  but  it  was 
mostly  fictitious — merely  paper  capital — nothing,  in 
fact,  but  the  creation  of  a  book  debt,  with  hypothe- 
cated stock  certificates  as  collateral  security.  More 
than  half  of  it  was  of  this  character — and  at  least 
another  fourth  was  in  excess  of  the  commercial  want ; 
but  it  was  legally  organized,  and  it  attracted,  or  hired 
deposits,  and  so  created  a  larger  basis  for  more  credit 
in  the  shape  of  loans,  which,  in  August,  1857,  were 
extended  to  over  forty  millions  of  dollars.  It  is  safe 
to  say,  that  two-thirds  of  this  prodigious  debt  was  a 
grievous  burden,  super-imposed  on  the  legitimate 
debt  of  the  community  ;  and  that,  instead  of  benefit, 
it  brought  embarrassment  and  injury  to  the  trade  and 
labor  of  the  city. 

This  was  the  expansion  that  jprejpared  the  crisis  of 
1857.  It  was  an  overgrowth  of  banks,  and  an  over- 
toppling  of  credit  on  the  overgrowth.  It  does  not 
alter  the  case,  that  many  of  the  new  institutions  have 
since  become  entirely  successful  and  well  managed ; 
but  it  furnishes  the  ground  of  an  important  exception 
in  favor  of  the  older  banks,  as  to  exact  responsibility 
for  the  panic.  These,  almost  without  an  exception, 
maintained  their  discount  lines  nearly  unchanged, 
while  the  panic  was   created  by  other  institutions. 


AN   EXCEPTION.  371 

The  affairs  of  some  of  the  new  banks,  also,  had  been 
so  judiciously  managed  as  to  rank  them  with  the 
exceptional  part  of  the  system. 

The  author  does  not  pretend  to  find  a  complete 
apology  for  the  older  banks,  in  the  fact  here  stated. 
If  their  managers  were  more  experienced,  they  might 
have  furnished  counsel,  and  ability,  to  guard  the 
system  against  the  calamity  wliich  the  figures  of  the 
Clearing  House  prognosticated  as  far  back  as  August 
1855. 

Bank  government,  as  it  relates  to  the  whole  system 
in  the  City  of  'New  York,  is  made  difficult  by  the 
composition  of  its  management.  The  twenty  old 
banks,  with  their  established  machinery,  worked 
together  with  comparatively  little  difficulty ;  but 
when  forty  others  were  added,  making  an  aggregate 
Board,  of  directors  and  bank  officers,  of  over  eight 
hundred  persons,  without  any  representative  body  to 
deliberate  upon  common  interests,  the  whole  system 
was  out  of  control.  To  this  fact,  must  be  added 
another,  before  the  difficulties  of  the  case  can  be  fairly 
appreciated.  A  very  large  proportion  of  the  new 
bank  managers  were  without  experience  in  the  busi- 
ness. Presidents  were  chosen  with  no  reference  what- 
ever to  their  knowledge  or  capacity.  One  had 
acquired  wealth  by  selling  diy-goods,  and  therefore 
he  was  fit  for  a  bank  president ;  another  had  been 
equally  successful  in  making  shoes;  another  had 
been  a  ship-chandler,  and  fortunate  in  the  schooner 
coasting-trade ;  another  had  been  a  stage-driver :  not 
a  few  were  men  of  the  narrowest  minds,  wholly  lack- 


372  THE   PANIC. 

ing  in  mercantile  education,  and  without  the  ability 
to  conduct  the  simplest  commercial  correspondence. 
It  is  due  to  some  of  these  gentlemen  to  say,  that  if 
they  were  ignorant  in  the  beginning,  they  have  im- 
proved by  close  attention  to  practical  duties,  and  that 
for  general  intelligence  they  are  not  far  below  the 
average  of  their  cotemporaries  in  office.  They  have 
yet  to  learn,  however,  that  it  is  one  thing  to  be  a  bill 
broker  and  a  shrewd  calculator  of  balances,  and  quite 
another  to  understand  the  principles  of  true  economy 
in  finance. 

The  natural  consequences  of  placing  incompetent 
men  in  the  responsible  office  of  bank  president,  could 
not  in  all  cases  be  averted.  Several  instances  of  gross 
mismanagement  occurred,  in  which  institutions  were 
saved  from  insolvency,  either  by  a  change  of  officers, 
or  by  the  help  of  the  Associated  Banks,  Several  others 
maintained  a  feeble  existence  for  a  short  time,  and 
sunk  into  final  discredit ;  and  in  five  or  six  cases,  at 
least,  there  were  such  serious  deficiencies,  as  to  justify 
suspicions  of  dishonesty  and  collusion  among  the  Di- 
rectors. How  the  legal  weekly  and  quarterly  state- 
ments could  be  sworn  to,  up  to  the  time  when  the  entire 
stock  of  a  bank  was  lost  or  squandered,  is  a  question 
for  the  parties  concerned  to  settle  with  themselves. 

It  is  not  necessary  to  clog  this  sketch  with  the 
numerous  accidents  that  were  added  from  day  to  day, 
to  increase  the  popular  excitement,  and  to  multiply 
its  terrors.  The  embarrassment  of  the  exchanges 
between  different  jDarts  of  the  country,  and  the  conse- 
quent stoppage  of  remittances ;  the  depreciation  of 


I 


THE   INDEPENDENT.  373 

the  bank  currency,  which  the  farmer  refused  to  take 
in  payment  for  produce ;  the  failure  of  individuals  and 
corporations,  including  the  Illinois  Central  Railroad 
Company ;  the  run  on  the  Savings'  Banks — all  these 
were  but  the  gathering  wrecks  that  fell  in  as  the  tor- 
rent rushed  on. 

There  was  one  cause  of  aggravation,  however,  that 
cannot  be  called  an  accident.  The  weekly  publica- 
tion of  failures,  in  The  Independent^  a  religious  paper 
of  wide  circulation,  spread  dismay  over  the  country. 
This  frightful  record  was  copied  by  all  the  principal 
journals,  from  Boston  to  New  Orleans.  It  sharpened 
and  fed  the  common  appetite  for  calamities.  It  cut 
off  remittances  from  debtors  who  were  too  ready  to 
adopt  the  plea,  that  "  money  would  be  of  no  use  to 
broken  merchants,"  and  to  follow  it  up  by  assuming 
that  "all  were  as  good  as  broken" — a  pretext  that 
found  some  color  of  support,  in  a  record  that  em- 
braced, by  the  middle  of  October,  more  than  twelve 
hundred  merchants  of  all  classes,  incorporated-  stock 
companies,  and  banks.  It  became  a  reproducing 
cause  of  embarrassment,  and  one  of  the  chief  agencies 
in  propagating  that  moral  insolvency  which  consti- 
tuted a  prominent  feature  of  the  panic.  The  sanctity 
of  engagements  was  openly  repudiated,  under  the 
pretext  of  universal  bankruptcy.  The  authors  of 
this  commercial  necrology  could  urge  nothing  in  its 
defence,  but  the  improved  sale  of  a  newspaper! 
Their  excuse  might  be  thoughtlessness,  or  incapacity 
to  see  that  any  rule  of  decency  is  broken  by  holding 
up  the  misfortunes  of  individuals  to  gratify  a  morbid 
public  curiosity. 


374  THE   PANIC. 

The   disclosures  of  the  panic  show,  measurably 
what  was  the  state  of  things  before  it  commenced, 
Notwithstanding  the  appearances  of  prosperity,  there 
existed  all  the  conditions  of  extraordinary  financial 
disturbance. 

A  prodigious  weight  of  insolvency  had  been  car- 
ried along  for  years  in  the  volume  of  trade.  Extrav- 
agance of  living  had  already  sapped  the  foundations 
of  commercial  success,  in  hundreds  of  instances  where 
credit  supplied  the  place  of  lost  capital.  Mismanage- 
ment and  fraud  had  gained  footing  in  public  compa- 
nies to  an  incredible  degree.  Hundreds  of  millions 
of  bonds  were  issued  with  little  regard  to  the  validity 
of  their  basis,  and  pressed  upon  the  market  by  dis- 
honest agents,  at  any  price,  from  sixty  down  to  thirty 
cents  on  the  dollar.  False  quotations  were  obtained 
by  sham  auction  sales.  The  Press,  in  particular 
instances,  was  bribed  into  silence,  or  became  a  part- 
ner in  the  profits  to  be  derived  from  the  various 
schemes  which  it  commended  to  general  confidence. 
The  land  grants  by  Congress  to  railway  companies 
gave  renewed  activity  to  siDCculation,  and  State  Legis- 
latures were  bribed  to  locate  roads  to  serve  indi- 
vidual interests.  Public,  as  well  as  private  credit, 
was  compromised.  The  example  of  corruj)tion  in 
Government  commissions  and  contracts,  and  of  bad 
faith  with  neighboring  nations,  was  an  extreme,  but 
a  faithful  expression  of  the  tone  of  popular  feeling 
with  respect  to  the  sacredness  of  trusts  and  obligations. 

The  general  mass  of  credit  in  the  United  States 
rested  on  these  facts ;  and  the  strictly  commercial 
part  of  it  was  involved  in  the  common  risk.     There 


CAUSE   OF   FLUCTUATION.  375 

were  few  merchants  whose  secret  drawers  did  not 
contain  sore  evidences  of  capital  sunk  or  withdrawn 
from  legitimate  use,  to  be  invested  in  some  dazzling 
speculation.  The  deficiency  of  means  to  carry  on 
business  could  be  supplied  only  by  an  increase  of  the 
personal  credit. 

It  is  this  personal  credit  that  prepares  all  the 
extreme  fluctuations  of  our  commercial  or  financial 
system.  The  bills  payable  of  the  merchant  represent 
not  only  his  merchandise  debt,  but  his  debt  for  sunken 
capital,  his  debt  for  railway  bonds,  his  debt  for 
extravagant  living,  for  real  estate,  and  for  fancy 
stocks.  The  one  hundred  and  twenty-two  millions  of 
bills  payable  that  constituted  the  bank  loans  in 
August,  was  probably  less  than  one-fourth  of  the 
personal  debt  then  current  in  the  city  of  New  York. 
Three  times  that  amount  besides,  floated  in  other 
channels,  in  the  hands  of  private  capitalists,  in  trust 
and  insurance  companies,  in  open  book  account,  and 
in  foreign  banks.  Immediately  on  the  accession  of  a 
financial  pressure,  this  entire  mass  of  debt  starts  into 
new  activity.  It  presses  on  every  bank,  and  through 
every  channel,  for  negotiation,  renewal,  or  compro- 
mise. That  which  is  least  entitled  to  consideration — 
the  extra-commercial  portion — is  most  pressing,  and 
leads  the  market  in  paying  high  interest;  while 
that  which  represents  real  trade,  is  reluctant  to  go 
above  the  bank  rates.  Speculative  rates  are  thus 
imposed  on  the  whole  market. 

There  are  no  positive  limitations  to  the  expansion 
of  individual  credit.     A  pernicious  practice'^  prevails 

*  This  practice  originated  with  the  commiasion  merchants. 


376  THE   PANIC. 

of  making  promissory  notes  payable  to  the  order  of 
the  drawer,  and  thus  negotiable  without  indorsement. 
When  the  seller  iinds  that  his  customer  has  reached 
the  line  of  credit  that  he  is  willing  to  allow,  instead 
of  refusing  to  sell  more,  and  thus  offering  a  prudential 
restriction  to  the  extent  of  his  business,  he  goes  on 
Belling,  and  disposes  of  the  accumulating  excess  of 
the  buyer's  paj)er  in  "the  street."  In  this  way  he 
overstocks  the  market  with  goods,  and  gives  a  credit 
of  thirty  thousand  dollars  to  a  man  whom  he  considers 
it  unsafe  to  trust  for  more  than  three  thousand ;  and 
the  risk  of  twenty -seven  thousand  is  scattered  broad- 
cast in  the  community !  The  buyer  knows  that  his 
creditor  gets  rid  of  his  notes,  and  what  does  he  care 
if  strangers  lose  by  him  ?  This  should  be  regarded 
as  a  commercial  offence  of  the  gravest  character.  It 
is  impossible  to  have  an  honest  money-market  while 
it  is  tolerated.  What  better  is  it,  than  a  trick  of  the 
manufacturer  and  wholesale  merchant  to  reap  the 
profits  of  trade  while  throwing  off  his  risks  upon  inno- 
cent people  ?  It  corrupts  credit,  and  turns  commerce 
into  mere  headlong  chances. 

OF  BANK  CUHRENCT. 

Of  all  theories  intended  to  explain  our  financial 
fluctuations,  that  which  attributes  them  to  the  hank 
currency  has  least  foundation  in  fact.  A  confusion 
of  terms  is  probably  the  chief  source  of  the  misunder- 
standing that  prevails  on  this  point. 

In  common  parlance,  hank  currency  means  circulat- 
ing hank  notes — "  paper  money."    Yet,  it  would  seem 


BANK  CUKRENCT.  377 

that  some  writers  include  under  the  same  head, 
checks  and  promissory  7iotes,  if  not  also  loans  and 
deposits ;  considering  them  all  to  belong  to  the 
volume  of  the  business,  and  to  be  subject  to  expan- 
sion or  contraction  at  the  will  of  bank  managers. 
Thence  comes  the  general  idea,  that  whatever  is  not 
specie,  in  bank  transactions,  is  J)anTc  currency. 

Webster  defines  currency  to  be  that  which  "  con- 
tinually passes  from  hand  to  hand,  as  coin  or  bills  of 
credit;  circulation,  as  the  currency  of  cents,  or  of 
English  crowns ;  the  currency  of  bank  bills  or  Trea- 
sury notes." 

That  which  "  continually  passes  from  hand  to  hand," 
in  buying  or  selling,  is  the  primary  idea  of  currency. 
Bank  currency  can  properly  refer  only  to  that  which 
emanates  from  banks ;  and  circulating  notes,  or 
"  paper  money,"  is  the  only  form  of  credit  which  they 
are  authorized  by  law  to  issue,  or  which  practically 
answers  the  function  of  currency  in  their  trans- 
actions. 

Again,  Ijank  currency  is  something  that  it  is  in  the 
power  of  the  banks  to  control — to  increase,  or  to 
diminish ;  and  above  all,  which  they  are  bound  to 
redeem  on  presentation. 

If  this  definition  is  correct,  it  cannot  include 
checks  and  promissory  notes;  because,  in  the  first 
place,  these  are  not  issued  by  the  banks ;  in  the 
second,  they  do  not  continually  pass  from  hand  to 
hand ;  and  thirdly,  they  are  not  redeemable  by  the 
banks. 

In  reality,  the  several  terms  employed  represent 
but  one  thing.     Checks,  promissory  notes,  and  loans 


378  THE   PANIC. 

are  mere  accessories  of  the  deposit.  The  first  are 
issued  by  the  individual  dealer  in  his  discretion,  and 
the  bank  pays  them  out  of  his  deposit ;  promissory 
notes  are  a  dormant  security  dm*ing  the  continuance 
of  the  loan,  which  itself  is  made  available  to  the 
dealer  in  the  character  of  a  deposit.  The  only  ques- 
tion to  be  answered  is,  therefore,  whether  deposits 
can  be  called  hank  currency.  The  only  approach  to 
circulation  by  any  document  which  represents  the 
deposit,  is  in  the  check,  when  it  is  certified  and  sent 
abroad  to  pay  a  debt,  or  when  it  is  deposited  in 
another  bank  and  redeemed  through  the  exchanges. 
The  "certificate  of  deposit"  is  the  same  thing  in 
another  form.  The  promissory  note,  when  it  is  dis- 
counted, is  filed  away  in  the  vault,  and  is  rather  with- 
drawn from,  than  put  into  circulation. 

Banks  cannot  govern  the  amount  of  deposit  by  the 
dealers,  otherwise  than  by  discounting  paper,  and 
giving  them  credit  in  account  for  the  proceeds.  They 
cannot  govern  the  issue  of  promissory  notes  in  the 
market,  this  being  the  act  of  individuals.  It  would 
be  a  solecism,  to  apply  the  term  hanh  currency  to 
documents  which  are  issued  by  every  merchant  in 
the  community  without  the  knowledge  of  bank 
managers. 

Finally :  banks  do  not  send  out,  for  circulation,  a 
single  document  in  any  shape,  excepting  the  bank 
note — "  paper  money." 

Whatever  terms  may  be  employed  to  distinguish 
the  difi'erent  evidences  of  debt  which  are  circulated 
in  the  market — whether  individual  currency  or  com- 
mercial currency — it   seems  proper  to   confine  the 


PLAITS   AND   CUKEENCY. 


379 


application  of  lanh  currency  to  bank  notes.  It  is 
certain  that  this  is  what  the  advocates  of  "  hard  cur- 
rency" aim  at,  when  they  urge  their  theory  as  the 
only  preventive  of  excessive  financial  fluctuations. 

The  following  table  shows  the  relative  movement 
of  loans  and  circulation  in  our  city  banks,  from 
August,  1853,  to  September,  1858,  excepting  periods 
, which  exhibit  no  remarkable  fluctuation : 


1853 From  Aug. 

6  to  Nov.  5, 

dec. 

$14,796,987  dec. 

18,307 

1853-4 « 

'     Nov. 

12  to  Mar.  4, 

inc. 

11,676,012  dec. 

77,799 

1854 ' 

'    March  4  to  July  8, 

dec. 

6,211,140  dec. 

14,073 

1854 ' 

'     July 

8  to  Aug.  5, 

inc. 

5,373,860  dec. 

71,109 

1854 ' 

'     Aug. 

5  to  Dec.  9, 

dec. 

13,129,505  dec. 

1,643,815 

1854-5 ' 

'    Dec. 

9  to  April  7, 

inc. 

13,905,758  inc. 

290,701 

1855 ' 

'    June 

2  to  July  28, 

inc. 

7,886,147  dec. 

146,111 

1855 ' 

'  .  Aug. 

25  to  Nov.lO, 

dec. 

8,150,314  inc. 

506,513 

1855-6 ' 

'    Dec. 

8  to  Mar.  15, 

inc. 

11,338,495  inc. 

1,407 

1856 ' 

'     April 

12  to  May  31 

dec. 

5,389,160  dec. 

12,374 

1856 ' 

'     May 

10  to  Aug.   2 

inc. 

8,417,770  dec. 

16,442 

1856-7 ' 

'     Nov, 

8  to  Aug.  1, 

inc. 

18,088,411  dec. 

281,299 

1857 ' 

'     Aug. 

1  to  Oct.  17 

dec. 

23,351,224  dec. 

577,981 

In  six  of  the  thirteen  periods  cited,  the  movement 
of  the  currency  was  adversely  to  that  of  the  loans ; 
and  in  the  other  seven,  though  in  the  same  dii'ection, 
it  is  manifest  that  there  was  no  governing  sympathy 
between  them.  In  one  case,  the  loans  were  reduced 
flfteen  millions  of  dollars,  while  the  circulation  dimin- 
ished but  eighteen  thousand — they  were  then  increased 
twelve  millions,  while  the  circulation  continued  to  fall, 
but  in  four  times  greater  ratio.  In  two  instances,  the 
loans  increased  eleven  millions  of  dollars  :  in  one  of 
them,  the  currency  was  diminished  seventy-eight  thou- 
sand, and  in  the  other  it  was  augmented  one  thousand. 


380  THE  PANIC. 

In  one  case,  the  circulation  increased  five  hundred  thou- 
sand dollars,  and  in  another  it  diminished  six  hundi'ed 
thousand,  with  a  coincident  reduction  in  the  loans  of 
eight  and  twenty-three  millions.  Only  once  in  the 
table  is  there  an  appearance  of  sympathy — when  the 
loans  fell  thirteen  millions,  and  the  circulation  one 
million  six  hundred  thousand  dollars  ;  and  in  this  case, 
the  withdrawal  of  de^^osits  fully  accounted  for  the 
reduction  of  loans,  leaving  that  of  the  circulation  to 
be  otherwise  explained.  The  scarcity  of  exchange  at 
points  in  debt  to  New  York  will,  at  any  time,  cause 
our  city  currency  to  be  rapidly  returned  from  all  parts 
of  the  country. 

The  annexed  diagram  shows  the  relative  fluctuation 
of  the  currency  and  the  loans  from  August,  1853,  to 
December,  1857.  The  extreme  range  of  the  former 
was  about  one  and  a  half  millions  of  dollars,  while 
that  of  the  latter  was  over  forty  millions. 

The  opinion  that  bank  loans  are  governed  by  the 
currency  was  justified  under  the  old  laws,  which 
allowed  an  issue  of  bills  equal  to  twice  the  amount 
of  capital,  without  a  pledge  of  securities,  and  without 
personal  liability  for  the  debts ;  but  it  is  groundless 
under  our  State  system.  The  old  laws  would  have 
given  an  issue  of  one  hundred  and  twenty  millions  of 
bills  to  our  present  city  capital ;  whereas,  we  have  but 
ten  millions,  and  but  three-fourths  of  that  in  circula- 
tion.* 


*  The  Superintendent  of  the  Banking  Department,  in  his  report  for  1857,  In 
view  of  the  fact  that  the  New  York  City  bank  currency  was  contracted  but  a 
million  and  a  half  during  the  panic,  says  :  "  This  would  seem  clearly  to  demon- 
strate, that  whatever  may  lead  to  a  suspension  of  specie  payments,  the  currency 
of  our  bankB,  properly  secured,  is  not  an  element  In  its  production." 


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BANK   CURRENCY.  381 

A  proposition,  that  the  issue  of  bank  bills,  of  a  less 
denomination  than  twenty  dollars,  shall  be  prohibited 
by  law,  has  met  with  a  good  deal  of  public  com- 
mendation. It  is  not  easy  to  see  how  this  could  add 
any  security  to  our  bank  currency,  nor  how  it  would 
guard  our  financial  system  from  the  dangerous  fluctu- 
ations consequent  on  excessive  commercial  credit. 
It  might  restrict  loans,  by  making  it  necessary  for 
banks  to  keep  on  hand  a  larger  reserve  of  coin,  and 
therefore  lessen  the  profits  of  the  business.  One  of  two 
things  must  then  follow  :  either  banking  capital  will 
be  surreptitiously  employed  to  make  up  the  deficiency 
of  profit,  or  it  will  seek  more  productive  methods  of 
organization.  Another  result  might  be  expected : 
credit  suppressed  in  one  form  will  find  another,  beyond 
the  reach  of  legislation.  The  personal  check,  or  order, 
would  take  the  place  of  the  bank  bill  in  all  remit- 
tances under  twenty  dollars,  involving  delays  and 
expenses  of  collection  that  would  fall  most  heavily 
on  small  dealers  or  laborers,  who  can  least  afford  them. 
Men  who  keep  no  bank  account,  women,  and  minors, 
would  be  obliged  to  pay  a  broker's  commission  for 
the  most  trifling  remittance.  The  amount  of  this 
small  check  credit  would  be  infinitely  greater  than 
the  decrease  of  bank  currency,  without  its  convenience 
or  security. 

In  the  midst  of  the  late  panic,  everybody  felt  the 
necessity  of  doing  something  to  prevent  its  recur- 
rence ;  and  under  the  weight  of  its  consequences, 
various  legislative  restrictions  have  been  proposed, 
with  a  view  to  render  our  banking  system  less  unsta- 
ble in  future.    But  it  may  well  be  questioned,  whether 


382  THE  PANIC. 

more  mischief  is  not  to  be  apprehended  from  the  con- 
stant tinkering  of  politicians  than  from  any  other 
source — not  excepting  the  errors  of  past  legislation, 
which  we  are  gradually  correcting  by  experience,  and 
by  voluntary  action,  without  the  aid  of  law. 

BAifK-NOTE   EEDEMPTION. 

The  diversion  of  bank  currency  from  its  legitimate 
channels,  and  the  establishment  of  a  trade  in  it  be- 
tween the  banks  themselves,  has  had  a  share  in  the 
general  derangement  of  credit,  and  in  the  misapplica- 
tion of  banking  capital. 

The  only  proper  use  of  currency  is,  cvi'culation — to 
pay  wages,  to  buy  commodities  in  store  or  market, 
and  to  answer  the  convenience  of  daily  expenditure 
by  the  people.  The  privilege  of  issue  is  given  by 
law  for  this  purpose,  and  for  no  other.  The  advant- 
age to  the  bank  consists  in  the  currency  fulfilling  this 
function  of  circulation — ^in  its  passing  from  hand  to 
hand,  giving  life  to  industry,  and  forming  the  basis 
of  the  larger  operations  of  commerce.  The  bank 
pays  it  out  for  notes  discounted  or  for  deposits,  and 
realizes  interest  upon  it  until  it  is  returned  for  redemp- 
tion. The  more  circulation,  the  more  profit.  Itis, 
therefore,  an  object  for  banks  to  keep  out  their  bills 
as  long  as  possible.  They  resort  to  various  expedients 
for  this  purpose,  such  as  discounting  notes,  on  con- 
dition that  the  bills  shall  be  taken  to  a  distance,  and 
paid  out  for  purchases  of  wool,  for  wages  on  a  rail- 
road, or  other  service.  A  large  aggregate  of  cur- 
rency is  thus  forced  out  upon  the  country,  to  find  its 


THE   REDEMPTION   SYSTEM.  383 

way  back  for  redemption  througli  tlie  usual  channels 
of  exchange.  The  city  merchants  who  received  this 
currency  in  remittance  for  debt,  formerly  sold  it  to  the 
money-broker  at  a  certain  rate  of  discount,  which 
varied  more  or  less  from  one  per  cent.  It  might  be 
resold  by  the  broker  at  a  smaller  rate  to  manufactur- 
ers, who  could  save  by  this  process  a  certain  per 
centage  on  their  entire  disbursements,  and  it  would 
then  start  out  on  a  new  tour  of  circulation  through 
the  shops.  Banks  could  often  better  afford  to  divide 
with  brokers  the  profits  of  a  perpetual  circulation  than 
to  redeem  it  in  gold.  Those  banks  which  were  least 
able  to  redeem,  and  whose  bills  were,  therefore,  least 
entitled  to  credit,  were  most  persevering  and  ingen- 
ious in  keeping  the  community  supplied  with  their  cur- 
rency. This  was  a  debased  paper  currency.  Accord- 
ingly, as  it  supplied  the  market,  the  bills  of  better 
banks,  which  would  not  stoop  to  competition  in  such 
business,  were  kept  out  of  circulation.  The  result, 
so  far  as  om*  city  banks  are  concerned,  is,  that  their 
circulation  hardly  pays  the  cost  of  maintaining  it. 

A  new  source  of  profit  was  suggested  to  some  of 
our  city  banks.  If  the  redemption  that  was  distri- 
buted among  the  money-brokers  could  be  monopolized 
by  one  or  two  institutions,  it  would  yield  a  rich 
revenue ;  and  it  could  easily  be  attracted  by  reducing 
the  rates  of  redemption  so  low  as  to  exclude  indi- 
vidual competition.  This  was  the  origin  of  the  New 
York  redemption  system,  copied  from  the  Suffolk 
Bank  of  Boston.  Coupled  with  the  payment  of 
interest  on  country  deposits,  it  had  grown  into  aston- 
ishing activity  before  the  panic  of  1857.    It  worked 


384:  THE   PANIC. 

admirably  as  a  piece  of  machinery,  witli  the  popular 
commendation  that  it  restricted  the  bank  currency 
by  enforcing  prompt  redemption,  and  saved  our  mer- 
chants a  heavy  brokerage.  It  was  a  great  conve- 
nience in  the  first  days  of  the  panic,  when  private 
capital  was  withdrawn  from  the  purchase  of  currency, 
and  when  our  merchants,  but  for  the  redeeming  banks, 
would  have  been  overburdened  with  unavailable 
notes. 

But  the  Kedemption  System,  like  everything  else 
that  was  susceptible  of  abuse,  was  turned  aside  fi'om 
its  legitimate  purpose,  and  made  to  answer  a  mis- 
chievous end.  The  low  rate  at  which  the  bills  were 
taken  in  New  York  accelerated  their  return  in  hulk^ 
as  a  basis  of  exchange,  or  for  credit  in  account,  and 
thus  their  distinctive  character  as  circulation  was  in 
a  great  measure  destroyed.  This  is  plainly  illustrated 
by  the  diagram  on  the  opposite  page.» 

The  natural  course  of  the  circulation  is  represented 
by  the  curved  lines  «,  a,  a.  It  is  paid  out  by  the 
banks  at  Buffalo,  Syracuse  and  Whitehall,  and  after 
performing  its  function  in  the  service  of  trade,  it 
reaches  the  common  point  of  liquidation — New  York. 
Here,  it  is  assorted,  charged  in  account  to  the  issuing 
banks,  and  sent  home  by  express,  to  be  again  issued, 
circulated,  and  redeemed,  in  the  same  manner.  This 
is  our  bank  currency  in  legitimate  use  as  contem- 
plated by  law. 

But  the  cheap  redemption,  so  desirable  in  a  com- 
mon state  of  the  market,  became,  virtually,  a  pre- 
mium on  the  currency,  at  New  York.  The  tendency 
was  then  to  take  it  out  of  the  curved  lines  of  a  health- 


BANK-NOTE  REDEMPTION.  385 

fill  circulation,  and  to  throw  it  into  the  elliptical  lines 
h,  h,  in  which  it  profited  nobody  so  much  as  the  stock- 
holders of  the  Express  Companies.  The  country 
banks  might  keep  their  own  bills  in  a  perpetual  cir- 
cuit by  exchanging  them  with  each  other,  and  thus 
creating  a  trade  in  them.  The  same  packages  were 
not  unfrequently  kept  unopened  in  the  circuit,  and 
reissued  in  bulk  as  often  as  they  were  needed  to 
supply  balances. 

When,  from  having  been  to  much  expanded,  there 
arises  necessity  for  a  general  contraction  of  credits, 
if  then  a  portion  of  the  circulation  is  withheld  by  the 
banks,  as  it  should  be,  the  redemption  of  the  other 
portion  would  go  on  quietly,  and  no  apprehension 
would  be  excited  in  the  public  mind  as  to  the  safety 
of  bills.  The  proportion  of  capital  appropriated  to 
this  special  service  would  keep  in  harmony  with  the 
diminishing  volume  of  commercial  credit.  But  this 
does  not  commonly  happen.  To  keep  out  the  circu- 
lation, and  to  increase  it,  gives  relief  to  the  bank.  If 
it  cannot  enforce  the  liquidation  of  its  loans,  it  is  still 
more  urgent  to  keep  its  bills  in  circulation — to  throw 
out  more,  and  to  stave  off  actual  redemption.  The 
redeeming  banks  are  then  likely  to  be  required 
to  do  one  of  two  things :  either  to  appropriate  more 
capital  to  this  service,  or  to  reject  the  bills.  In  the 
former  case,  its  commercial  loans  must  bear  the  brunt, 
and  in  the  latter,  it  would  spread  alarm  among  bill 
holders,  and  aggravate  the  evil  that  it  wants  to  ward 
off. 

Precisely  this  state  of  things  occurred  in  the  sum- 
mer of  1857.     In  spite  of  the  best  management  by 

17 


386  THE   PANIC. 

the  redeeming  banks,  the  circnit  of  currency  credit 
was  kept  up,  and  relatively,  if  not  positively,  in- 
creased. Currency  was  made  to  redeem  currency ; 
that  is,  the  bills  of  one  bank  were  paid  for  by  the 
bills  of  all  others  which  it  remitted  for  credit  in 
account ;  and  thus  there  was  no  actual  redemption. 

Another  fact,  which  was  claimed  to  be  beueticial 
in  an  ordinary  state  of  things,  now  proved  a  source 
of  apprehension  and  real  danger.  The  credit  given 
to  an  unsecured  currency  by  the  indorsement  of  the 
redeeming  banks  had  obtained  for  it  a  wide  circula- 
tion, to  the  displacement  of  bills  that  were  based  on 
State  and  United  States  stocks.  It  was  now  seen 
that  this  credit  had  no  other  dependence  than  a  cur- 
rent deposit  by  the  issuing  bank,  which  deposit  was 
in  very  small  proportion  to  its  outstanding  bills,  and 
that  the  redeeming  bank  was  prompt  to  the  hour  in 
repudiating  those  bills,  if  the  deposit  was  not  main- 
tained. This  was  a  fallacious  credit,  entirely  inde- 
pendent of  the  separate  ability  of  the  issuing  banks. 
The  general  result  was,  that  bills  were  likely  to  fail 
while  in  transit,  and  they  would  not  then  be  admitted 
as  a  deposit,  which  would  involve  the  rejection  of 
other  bills ;  and  so  the  row  of  bricks  began  to  tumble 
in  both  directions. 

There  was  no  incident  of  the  panic,  that  spread  its 
terrors  abroad  with  such  sure  and  rapid  steps,  as  the 
rejection,  by  the  redeeming  banks,  of  bills  which  they 
had  been  accustomed  to  receive  on  deposit.  If  it  had 
been  possible  to  remove  all  other  causes  of  excite- 
ment, that  alone  would,  probably,  have  involved  the 
suspension  of  specie  payments.    It  tilled  all  the  shops 


WILL   SUSPENSION   OCCUR   AGAIN?  387 

in  the  countrj  with  alarm.  It  created  mobs  in  our 
savings'  banks,  and  pushed  forward  the  panic  by 
exciting  the  fears  of  the  multitude. 

WILL   SUSPENSION   OCCUR   AGAIN  ? 

""Well,"  says  a  judicious  bank  President,  "this 
will  be  a  warning  to  our  merchants!  It  is  to  be 
hoped  that  such  experience  will  burn  into  them  some 
lessons  about  their  long  and  excessively-extended 
credits." 

Yes,  Mr.  President;  and  we  hope  it  will  be  a 
warning  to  you,  also !  It  was  not  our  long  credits 
only,  that  threw  us  into  embarrassment,  but  your 
expansion,  and  then  your  repudiation  of  all  credits ! 
Shall  we  not  profit  by  both  of  these  "  experiences  ?" 

Our  bank  ofiicers  are  invested  with  a  controlling 
power  over  the  market.  They  can  positively  command 
the  ship  of  commerce,  and  guide  it  through  the  storm, 
or  they  can  dash  it  upon  the  rocks. 

It  is  a  false  notion,  that  panic  comes  from  myste- 
rious and  unmanageable  causes.  So  long  as  we  give 
credence  to  this  commercial  fatalism,  and  accept  it  as 
an  excuse  for  the  incapacity  of  financial  managers,  we 
shall  be  liable  to  a  recurrence  of  panic  whenever  an 
adverse  wind  sweeps  the  ocean. 

"  If  there  had  only  been  an  able  man  among  bank 
officers,  in  whom  the  others  had  confidence,  to  take 
the  lead,  the  panic  might  have  been  crushed  in  the 
bud." 

This  was  a  common  and  freely-expressed  opinion 
among  all  classes  of  merchants.     It  is  a  singular  fact, 


388  THE   PANIC. 

that  must  occupy  the  foreground  in  any  history  of  the 
suspension  of  1857,  whatever  part  different  writers 
may  assign  to  accessory  causes.  In  the  fright  and 
confusion  which  succeeded  the  failure  of  the  Ohio 
Life  Insurance  and  Trust  Company,  our  bank  officers 
fell  back,  each  to  his  separate  place,  to  "  fortify"  his 
institution,  though  at  the  expense  of  every  private 
and  common  interest  of  the  market.  They  did  not 
recognize,  in  any  one  of  their  number,  that  superiority 
of  intelligence  and  capacity  in  management,  which 
in  times  of  anarchy  and  doubt  never  fails  to  be  felt — 
never  fails  (where  it  is  known  to  exist)  to  be  called  on 
to  lead.  ISTever,  in  the  whole  course  of  our  commer- 
cial history,  did  the  public  distress  cry  louder  for  the 
ability  that  can  unite  separate  interests  for  a  common 
purj^ose  ;  and  for  the  want  of  it,  no  common  purpose 
was  created.  Every  thing  went  by  chance,  or  by 
necessity. 

As  the  recurrence  of  financial  pressure  is  only  less 
certain  than  the  tides  of  the  ocean,  and  as  our  com- 
mercial dealings  are  annually  becoming  more  ex- 
tended and  complicated,  we  may  look  for  the  damage 
resulting  from  the  mismanagement  of  banks  to  be 
more  and  more  serious,  unless  measures  are  adopted  to 
prevent  it. 

Efforts  have  been  made,  occasionally,  during  the 
last  ten  years,  to  organize  something  like  a  College 
of  Finance,  in  which  the  general  interests  of  the 
market  should  be  kept  in  revision — but  without  suc- 
cess. This  result,  however,  is  now  foreshadowed  by 
the  Clearing  House.     Its  records  are  the  theme  of 


A   COLLEGE   OF   FINANCE.  389 

daily  conversation  in  financial  circles.  They  form 
the  basis  of  our  city  bank  administration.  A  nuciais 
is  thus  already  created,  to  attract  the  ideas  which 
have  heretofore  floated  loosely  in  the  minds  of  men 
without  object. 

A  college  composed  of  intelligent  merchants  and 
bankers — practical  men — would  combine  individual 
experience  and  research.  By  elucidating  the  causes 
of  financial  fluctuation,  and  its  bearings  on  the  gen- 
eral enterprise  of  the  country,  and  therefore  on  labor, 
they  might  aid  materially  to  correct  popular  errors 
with  respect  to  our  banking  system,  whilst  securing 
needful  instruction  to  themselves.  At  present,  all  the 
statistics  of  finance,  excepting  only  those  of  the  Clear- 
ing House,  are  gathered  up  by  the  industry  of  the 
newspaper  press.  "The  commercial  editor"  is  the 
principal  collator,  analyzer,  and  elucidator  of  finan- 
cial data  in  the  city  of  New  York  ;  while  the  profes- 
sional banker  conceives  his  duty  to  be  confined  to  the 
mere  accidents  of  the  business  during  five  hours  of 
each  day ! 

"With  a  deliberative  body  in  existence  (such  as  is 
here  suggested)  the  suspension  of  specie  payments 
could  not  have  occurred  in  1857 ;  because  the  violent, 
separate,  and  destructive  action  of  the  banks,  which 
started  the  panic  must  have  been  overruled  by  sober 
counsel. 

There  are  certain  anomalies  in  force,  as  applied  to 
banks,  by  which  they  are  exposed  to  extreme  liabili- 
ties, not  only  in  seasons  of  pressure,  but  at  all  times. 
By  a  strange  absurdity  of  law,  the  deposits  of  a  bank 


390  THE  PANIC. 

are  held  to  be  payable  in  specie,  on  demand,  although 
the  amount  of  specie  in  the  whole  country  is  not  suf- 
ficient to  pay  the  one-twentieth  part  of  them.  It  is, 
therefore,  plain,  that  the  banks  might  be  forced  into 
suspension  by  the  dej)ositors  at  any  moment,  without 
regard  to  the  state  of  the  market. 

The  actual  relation  between  the  bank  and  the  dealer 
gives  no  color  of  right  to  the  latter  to  demand  specie 
for  his  deposit.  He  is  fully  aware  that  the  bank  does 
not  consider  itself  holden  for  the  coin.  He  does  not 
give  coin  ;  and  why  should  he  take  it  ?  He  deposits 
a  farm  of  credit,  or  individual  currency — checks. 
When  this  form  of  credit  sinks  in  the  general  depre- 
ciation, by  what  rule  of  consistency  or  justice  can  he 
require  the  bank  to  fill  up  the  deficit  ?  The  deprecia- 
tion originates  with  the  dealer,  in  the  excess  of  trade, 
and  not  with  the  bank :  it  may  encourage  the  excess 
by  loaning  too  freely,  but  the  dealer  is  not  obliged  to 
borrow.  There  is  obviously  no  propriety  in  his  load- 
ing the  bank  with  the  ill  consequences  of  his  own 
action.    Yet  such  is  the  accepted  rule. 

This  is  the  bull  goring  the  ox.  If  the  ox  attempts 
to  gore  the  bull,  the  case  is  changed.  Debts  owing 
by  the  bank  are  held  payable  in  coin  on  the  instant ; 
but  debts  due  to  the  bank,  by  the  very  same  party, 
are  held  to  be  negotiable  and  renewable,  consistently 
with  commercial  honor  and  usage.  In  one  case,  the 
failing  debtor  is  declared  "  broken,"  while  in  the  other, 
his  credit  continues  unimpaired. 

As  a  general  fact,  the  depositors  of  a  bank  are  also 
its  borrowers;  and  if  they  demand  their  deposits 
in  specie,  they  ought  to  pay  their  loans  in  specie. 


PKACTICAL   ABSUEDITIES. 


391 


But  no  written  a2;reement  could  be  made  less 
cal  than  the  understanding  between  the  bank  anc^.!  ^ 
dealer,  that  the  deposit  will  be  held  payable  by  chec±^, 
or  in  bank  bills  ;  and  that  its  demand  in  coin  out  of 
the  usual  practice,  or  its  final  withdrawal  as  a  current 
account,  before  the  payment  of  the  loan,  will  be  a 
breach  of  honor  and  good  faith.  No  bank  officer 
would  permit  an  account  to  be  opened  on  his  books 
specifically  subject  to  these  contingencies. 

The  relation  between  the  Savings'  Banks  and  their 
depositors  is  an  example  of  still  greater  absurdity, 
both  in  law  and  practice.  These  institutions  are  or- 
ganized to  encourage  economy  among  the  laboring 
classes,  by  paying  interest  on  small  amounts.  They 
are  conducted  mostly  by  benevolent  men,  and  gra- 
tuitously, excepting  necessary  clerk  hire.  The  law 
does  not  leave  the  investment  of  the  funds  discretion- 
ary with  the  managers,  but  defines  the  securities  that 
may  be  taken  —  one  of  the  chief  of  which  is  the 
mortgage  on  real  estate.  The  depositor  is  a  party  to 
this  mortgage,  and  is  cognizant  of  the  fact,  that  it  is 
not  immediately  convertible  into  money.  The  process 
of  foreclosure  involves  a  delay  of  three  months,  which 
cannot  be  shortened  by  law ;  and  yet,  when  a  panic 
occurs,  the  law  sustains  the  depositor  in  his  right  to 
demand  immediate  payment ;  and  because  the  bank 
does  not  pay  immediately,  it  is  declared  "  broken." 
This  is  equivalent  to  a  legal  requisition,  that  the  bank 
shall  keep  the  money  of  its  depositors  on  hand  in 
gold,  and  at  the  same  time  have  it  out  on  mortgage 
earning  interest !  Because  this  cannot  be  done,  the 
whole  country  is  to  be  loaded  with  the  discredit  of 


393 


THE   PANIC. 


jj  K^^^cy,  of  which  the  suspension  of  the  Savings' 
p    xi  is  regarded  as  the  least  doubtful  evidence. 

xN  either  is  this  all.  If  the  Savings'  Banks  had  been 
forced  to  pay  off  their  depositors  in  October,  1857, 
immeasurable  wrong  must  have  been  done  to-  the 
mortgagors,  by  selling  their  property  at  less  than  half 
its  value;  and  the  laborer  also  must  have  been  in- 
volved in  the  common  misfortune,  by  legal  expenses 
and  delay  of  jDayments. 

Finally,  this  demand  of  the  bank  depositors  can 
reach  but  one  result.  If  the  deposits  in  the  Com- 
mercial and  Savings' Banks  of!N^ew  York  amount  to  one 
hundred  millions  of  dollars,  and  the  amount  of  specie 
on  hand  to  twenty  millions,  those  who  apply  for  it  first 
will  get  their  money,  and  the  eighty  millions  will  go 
unpaid,  or  be  liquidated  by  some  form  of  credit. 

The  practice  of  holding  tokens  of  jpure  credit  as 
legally  liable  to  immediate  redemption  in  coin  is  here 
carried  to  the  extremest  practical  absurdity ;  and  it 
is  so  deeply  imbedded  in  popular  opinion,  as  to  con- 
stitute a  dangerous,  if  not  an  insuperable  anomaly  in 
our  financial  system. 

The  true  ofiice  of  gold,  in  commerce,  is  an  unset- 
tled question.  It  may  be  a  question,  also,  whether, 
if  once  determined,  it  can  remain  so  among  all  the 
changes  of  commerce,  production,  and  ideas  which 
are  going  on.  It  is  hardly  supposable  that  any  com- 
mercial relations  can  be  the  same  before  and  after  such 
improvements  as  those  which  govern  the  present  age. 
The  establishment  of  ocean  steam  navigation,  the 
construction  of  railroads,  and  of  the  magnetic  tele- 


TRTTE   OFFICE   OF   GOLD.  393 

graph,  have  practically  ignored  two  of  the  principal 
elements  in  exchange — distance  and  time.  The 
markets  of  the  world  have  already  been  stimulated 
in  an  excessive  degree  by  the  opening  of  gold  mines 
in  California  and  Australia.  Notwithstanding  the 
extent  to  which  discovery  and  explorations  have  been 
pushed,  the  scope  for  human  energy  is  still  enlarging. 
Is  it  likely  that  questions  of  economy  alone  shall  not 
change  their  terms  in  this  general  growth  and  expan- 
sion of  affairs  ? 

The  popular  notions,  concerning  gold,  are  for  the 
greater  part  hereditary.  They  are  less  the  result  of 
practical  experience,  and  of  reasoning  on  facts,  than 
of  pure  theory. 

The  destructibility  of  paper  money,  the  facility  of 
its  emission  without  limit,  and  its  consequent  fluctua- 
tion in  market  value,  with  the  various  frauds  that  it 
may  serve,  and  especially  its  imposition  as  wages  on 
the  poor  and  ignorant,  brought  it  deservedly  into  bad 
repute.  The  idea,  that  there  was  any  irality  about 
it,  became  almost  obsolete.  It  was  natural  thence  to 
assume,  that  silver  or  gold  was  the  only  real  money 
in  existence.  It  was,  therefore,  predicated  as  "  the 
standard  of  value." 

In  the  United  States,  politicians  have  made  the 
most  of  this  theory.  The  laboring  masses  vote ;  and 
they  have  flocked  to  the  polls  in  support  of  "  hard 
money."  This  is  about  the  whole  history  of  the  case 
in  its  political  bearings,  which  are  its  most  influential 
bearings. 

But  paper  money  has  been  forced  into  narrower 
limits.    It  has  been  so  guarded  by  legislative  restric- 

17* 


394  THE  PANIC. 

tions  and  penalties,  as  to  have  lost,  in  no  small  mea- 
sure, those  features  in  which  it  differed  so  widely 
from  gold.  It  cannot  be  issued  with  the  same  facility 
as  formerly,  and  the  fluctuation  of  its  market  value 
is  much  less.  In  the  State  of  ISTew  York,  it  has 
become  established  on  such  a  secure  basis,  as  to  be 
transposable  with  gold  in  all  conditions  of  the  market, 
at  such  an  insensible  fluctuation,  as  to  remove  the 
ground  of  all  the  old  objections  to  it.  The  politicians 
do  not  publicly  or  theoretically  abandon  the  contro- 
versy, because  it  is  still  available  in  the  elections. 
But  that  they  no  longer  entertain  it  as  a  question  of 
economy,  is  manifest  from  their  participation,  as  legis- 
lators, in  the  business  of  making  and  circulating  it. 

It  has  been  shown  by  the  demonstrations  of  the 
Clearing  House  that  the  bank  note  currency  of  the 
city  of  Kew  York  is  the  most  stable  of  all  known 
forms  of  credit.  Of  an  average  circulation  of  eight 
millions  of  dollars  among  the  people,  but  one  mil- 
lion was  returned  for  redemption  in  1857,  during  the 
unexampled  depreciation  of  every  other  token  of 
credit,  not  excepting  even  the  State  bond,  and  the 
mortgage  on  real  estate.  And  this  return  was  made, 
not  by  individuals  through  alarm,  but  mostly  by 
country  banks  to  meet  their  bills  of  exchange. 

It  appears,  therefore,  as  an  established  fact,  that 
gold  is  not  an  indispensable  pledge  for  the  soundness 
of  paper  money,  with  such  guarantees,  and  with  such 
limitations  as  are  established  by  the  laws  of  New 
York. 

It  is  not  used,  either,  in  the  ordinary  transactions 
of  commerce.    Debts  are  paid  by  bank  notes,  or  by 


TETIE   OFFICE   OF   GOLD.  395 

checks.  But  little  gold  passes  in  the  channels  of 
trade  for  the  daily  payment  of  fifty  millions  of  dol- 
lars, in  the  city  of  New  York.  More  than  half  of 
this  amount  is  settled  through  the  Clearing  House ; 
and  here,  for  the  first  time,  we  meet  the  use  of  gold 
in  any  considerable  sum.  One  million  and  a  half  of 
specie  settles  the  exchanges  of  thirty  millions  of  com- 
mercial currency.  It  is,  then,  in  final  liquidation  of 
balances  only,  that  gold  is  used.  We  find  it  perform- 
ing the  same  function  between  Europe  and  America. 
Four  hundred  millions  of  credit  pass  either  way — 
and  fifty  millions  settle  the  balance. 

The  only  other  channel  in  which  gold  accumulates, 
or  is  used  in  large  sums,  is  in  the  Postage  and  Revenue 
Departments  of  the  Government.  Here  we  are  at  the 
end  of  our  facts. 

Gold  appears  nowhere  in  large  sums,  excepting  in 
the  transactions  of  the  Government,  in  any  other  office 
than  as  Kquidator  of  balances.  And  the  amount 
necessary  to  a  running  credit  of  one  hundred  millions 
of  dollars  in  our  city  banks,  has  not  heretofore  ex- 
ceeded an  average  of  fifteen  millions.  With  this 
sum  in  steady  reserve,  every  operation  of  om*  ex- 
tended commerce  and  labor  has  been  satisfactorily 
conducted  for  a  number  of  years  past.  It  fails  only 
when  individual  credit  fails,  from  excess  of  trade,  from 
speculation,  and  accumulated  losses. 

There  is  one  fact  that  ought  not  to  be  overlooked : 
while  the  business  of  the  country  has  steadily 
increased,  the  bank  note  circulation  has  diminished, 
and  the  difference  has  not  been  made  up  in  coin. 
Other  forms  of  credit  have  mostly  supplied  it  — 


396  THE   PANIC. 

especially  the  individual  bank  check.  But  the  more 
active  service  of  the  circulation  consequent  on  the 
telegraph,  and  on  swifter  transit  by  railroad,  has  also 
done  much  to  supersede  the  necessity  of  such  large 
bank  issues  as  were  formerly  required.  Why  has 
not  gold  come  in  to  fill  the  void  ?  Is  it  not  because 
that,  too,  has  been  quickened  in  its  office  ?  Has  not 
this  new  element,  of  activity^  practically  answered 
for  quantity  ?  What,  under  the  old  modes  of  trans- 
port lay  inert,  because  inaccessible,  is  now  always 
in  motion,  performing  its  function  of  liquidation. 

Another  result  has  been  established  by  the  rapidity 
of  transit.  It  is,  comparatively,  non-essential  whether 
the  gold  of  the  market  is  held  in  one  sum  at  New 
York,  or  whether  it  is  distributed  at  various  points  in 
the  country,  provided  it  be  kept  within  the  power  of 
the  exchange.  The  transport  of  it  by  railway  is  a 
mere  accident  on  the  surface  of  things.  The  amount 
of  coin  in  the  Clearing  House,  at  a  given  time,  is 
therefore  not  an  unerring  index  of  the  strength  of  the 
market.  That  it  should  be  distributed  where  it  is 
most  needed  to  give  efficiency  to  labor,  or  to  develop 
resources,  is  of  more  consequence  to  the  common 
interest. 

Eapidity  of  communication  and  transit  is  a  new 
feature  in  commerce,  which  economists  have  not  yet 
had  the  opportunity  to  study  in  all  its  bearings.  The 
tendency  of  it  is,  to  simplify  our  system  of  trade,  to 
cure  it  of  local  eccentricities,  and  to  bring  all  its  parts 
under  the  influence  of  one  regulating  principle — the 
Exchange,  of  which  it  is  a  vital  element.  In  propor- 
tion as  the  telegraph  is  extended,  it  seems  inevitable 


ACCUMULATION   OF   GOLD.  397 

that  the  Exchange  shall  become  a  more  perfect  index 
of  the  state  of  commerce  between  different  coun- 
tries. 

The  accumulation  of  gold,  since  the  panic,  in  the 
several  financial  centres  of  London,  Paris,  Yienna,  and 
N"ew  York,  has  suggested  the  theory,  that  it  is  not 
necessary  in  the  provincial  towns  in  quantity  beyond 
the  current  wants  of  the  retail  trade  ;  that  it  is  only 
at  the  liquidating  points  where  it  is  ever  required  in 
large  sums.  The  idea  here  is,  doubtless,  the  true 
one — 'that  gold  is  not  the  basis  of  credit,  but  the 
balance  medium.  The  mass  of  credit  settles  itself  by 
exchange  ;  while  the  gold  only  pays  up  the  difference 
between  the  debit  and  the  credit  column.  It  is  pre- 
cisely this  office  that  it  fills  in  the  Clearing  House. 

The  influx  of  gold  into  New  York,  after  the  sus- 
pension of  specie  payments,  soon  enabled  the  banks 
to  resume ;  and  it  was  then  said,  that  they  would  not 
have  suspended,  if  this  gold,  instead  of  being  scat- 
tered abroad  through  the  country,  where  it  was  not 
wanted,  had  been  in  the  Clearing  House.  Therefore, 
to  prevent  panic  in  future,  let  us  keep  the  gold  in 
New  York. 

It  has  thus  been  accidentally  discovered,  that  the 
true  policy  of  finance  is,  to  denude  the  country  of 
coin,  and  to  keep  it  only  at  points  where  it  will  be 
wanted  if  the  foreign  exchanges  should  run  adversely. 
"We  ought  not  to  be  ungrateful  for  the  knowledge  of 
truth  because  it  comes  by  blundering,  however  we 
may  regret  that  it  has  not  been  evolved  by  an  atten- 
tive study  of  facts.  The  error  of  this  theory  consists 
in  assuming  the  results  of  disease  in  a  prostrate  body 


398  THE   PANIC. 

as  indications  of  health  in  a  sound  body.  "Why  not 
rather  revert  to  the  phenomena  that  existed  when  the 
body  was  in  vigorous  health,  and  adopt  these  as  indi- 
cations of  a  wholesome  state  of  the  system  ? 

The  unprecedented  accumulation  of  gold  in  the 
banks  of  New  Tork  is  the  result  of  cancelling  a 
foreign  debt  by  insolvency,  and  of  a  general  suspen- 
sion of  labor  throughout  the  country.  Capital  has 
returned  to  its  owners,  and  lies  dead.  They  refuse  to 
invest  it  as  heretofore,  in  public  improvements  and 
in  trade.  Let  labor  and  enterprise  be  resumed — ^let 
the  produce  of  the  West  come  into  market — let  om* 
commerce  with  foreign  nations  be  restored,  and  the 
coin  will  find  its  right  place.  The  same  laws  of  trade 
which  have  brought  it  here,  will  take  it  away.  The 
amount  held  in  reserve  by  the  banks  of  New  Tork 
will  be  adjusted  by  the  exchanges ; — it  will  be  found 
expensive  to  maintain  a  reserve  in  opposition  to  them, 
at  any  point  above  the  natural  level.  All  uneasiness 
about  deficiency  at  particular  points  may  cease,  if  the 
exchanges  are  wholesome ;  because,  as  already  ob- 
served, our  means  of  communication  and  transit  will 
restore  every  thing  in  a  few  hours. 

There  is  a  certain  common  property  in  gold,  or  in 
the  liquidating  medium,  from  which  it  is  impossible 
to  escape.  It  is  not  the  product  of  individual  saga- 
city, but  of  the  market  at  large — of  industry  and 
labor  generally.  The  moment  that  it  is  taken  out  of 
this  relation,  it  becomes  a  dead  and  worthless  weight. 
It  must  be  treated  as  the  property  of  the  market, 
giving  value  to  everything  in  it ;  and  losing  its  value 
the  instant  that  it  is  hoarded. 


COMMON   ri^pEjjTY   IN   GOLD. 


399 


Are  not  these  precise  fav.,  ?    ^^^  ^j^^jj  ^^  ^^^ 
give  weight  to  them,  and   to  .^   ^^^^^.  ^^^^^  ^^^^ 
respect  to  gold  that  maybe  develoi,  ^  j^  ^^^  progress 
of  discovery  and  combination?     Shall  ,^  ^^^,.        ^ 
-     -  ,  -,    1       .        ^  .1    ^  continue  to 

look  to  old  theories  oi  economy  as  the  fa  ,  n    -,-, 

wisdom  in  finance — theories  which  were  bu.  , 

M.  on  a 
narrow  range  of  facts,  as  compared  with  the  p.  ^ 

period ;  or  shall  we  analyze,  combine,  and  elucioc 

our  own  facts,  and  presuming  a  little  on  our  own 

capacity  and  experience,  add  our  knowledge  to  that 

of  the  past,  and  make  the  most  of  it ! 


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Annt  Kitty's  Tales,  12mo. 
Blind  Alice  ;  A  Tale  for  Good  Children,  . 
Ellen  Leslie  ;  or.  The  Reward  of  Self-Control, 
Florence  Amott;  or.  Is  She  Generous! 
Grace  and  Clara  ;  or.  Be  Just  as  well  as  Gen 

erous, 

Jessie  Graham ;  or.  Friends  Dear,  but  Iruti 

Dearer, 

Emily  Herbert ;  or.  The  Happy  Home, 
Rose  and  Lillie  Stanhope,         .        . 


Mamma's  Story  Bock,       .... 

Pebbles  from  the  Sea-Shore,    . 

Puss  in  Boots.  Illustrated.  By  Otto  Specter, 


)  IS 
1  00 
1  13 
3  00 


PITER  PARLEY  S  WORKS. 

Faggots  for  the  Fireside,  ,        ,        ,        . 
Parley's  Present  for  all  Seasons,      .        . 
Wanderers  by  Sea  and  Land,  . 
Winter  Wreath  of  Summer  Flowers, 


TALKS   FOR   THE   PEOPLE   AND    fHEIR 

CHILDREN. 

Alice  Franklin.   By  Mary  Howitt,  . 
Crofton  Boys  (The).    By  Harriet  Martmeau, 
Dangers  of  Dining  Out.    By  Mrs.  Ellis,   . 
Domestic  Tales.    By  Hannah  More.  2  vols. 
Early  Friendship.    Bv  Mrs.  Copley, 
Farmer's  Daughter  (the).   Bv  Mrs.  Cameron, 
First  Impressions.    By  Mrs.  E'llia,    . 
Hope  On,  Hope  Ever  1  By  Mary  Howitt, 
Little  Coin,  Much  Care.   By  do. 
Looking-Glaaa  for  the  Mind.    Many  plates, 
Love  and  Money.    By  Mary  Howitt,      , 
Minister's  FamUy.    By  Mrs,  Ellis,  .        • 
My  Own  Story.    By  Mary  Howitt,  .        . 
My  Uncle,  the  Clockmaker.  By  do. 
No  Sense  Like  Common  Sense.   By  do. 
Peasant  and  the  Prince,    By  H,  ftfartineaUf 
Poplar  Grove,   By  Mrs,  Copley,     .        , 
~     ■'      EUis, 


Somerville  Hall.    By  airs. 

Sowing  and  Reaping.   By  Mary  Howitt, 

Story  of  a  Genius 

Strive  and  Thrive.   By  do.      , 
The  Two  Apprentices.   Bv  do.         .        . 
Tired  of  Housekeeping.    By  T.  S.  Arthur, 
Twin  Sisters  (The).    By  Mrs,  Sandham, 
Which  is  the  WiserJ  By  Mary  Howitt, 
Who  Shall  be  Greatest  I  By  do,     . 
Work  and  Wages.   By  do.      .        .        , 


•■com)  BUUH. 
Chances  and  Changes,    By  Charles  Burdeti, 
Goldmaker's  Village,   By  H.  Zschokke, 
Never  Too  Late.    By  Charles  Burdett,  . 
Ocean  Work,  Ancient  and  M  xlem.  By  J.  H. 
Wright 


Picture  Pleasure  Book,  1st  Se  stt, 
"  "         «       2d  Sensi, 

Robinson  Crusoe,    300  Plates,  . 
Susan  Pindar's  Story  Book,       • 
Sunshine  of  Greystone,    , 
Travels  of  Bob  the  Squirrel,    , 
Wonderful  Story  Book,    • 
Willy's  First  Present, 
Week's  Delight ;  or.  Games  and  Stories  for  th« 

Parlor, 

William  Tell,  the  Hero  of  Switserlapd, 
Young  Student.    By  Madame  Guisot, 


I  S5 
I  it 

1  60 


D.  Applein  &  Company's  List  of  Nev  Works. 


Hiscellaneons  and  Geieral  Litera- 
ture. 

An  Attic  Philosopher  in  Paris, 

Appletona'  Library  Manual,      ,     ,        ,        ,     1  25 

Agnell's  Book  of  Chess, 1  25 

Arnold**  Miscellaneous  Works,  ,  ,  .  2  00 
Arthur,  The  Successful  Merchfti, 
A  Book  for  Summer  Time  in  the  tjuntry, 
Baldwin's  Flush  Times  in  Alaban,  ,  ,  1  25 
Calhonn  (J.  C),  Works  of.  4  volspnbl.,  each,  2  00 
Clark's  (W.  G.)  KnickKnacks,  .        .     1  25 

Comwall't  Music  as  it  Was,  and  i  it  It, 
Essays  from  the  London  Timee.  '.&  2d  SerieB, 

each, 

Ewbanks'  World  in  &  Workshop  . 
EUii'  Women  of  England,       .     , 

•*     Hearts  and  Homes, .        .     , 

•     Prevention  Better  than  Cf-e, 
Foster's  Essays  on  Christian  Moils, 
Sali/mith's  Vicar  of  Wakefield,  . 
Grant's  Memoirs  of  an  Americanjady^ 
Gaieties  and  Gravities.    By  Horre  Smith, 
Guizot's  History  of  Civilization,    . 
Hearth-Stone.  By  Rev.  S.  Osgoc, . 
Hobson.    My  Uncle  and  I,        ,     , 
Ingoldst^  Legends,  .... 
Isham's  Mud  Cabin, 
Johnson's  Meaning  of  Words,  .     , 
Kavanagh's  Women  of  Christiany, 
Leger's  Animal  Magnetism, 
Life's  Discipline.    A  Tale  of  Hungry 
Letters  from  Rom«.  A.  D.  133, 
Margaret  Maitland,  .        ... 
Maiden  and  Married  Life  of  Mar^Powelly 
Morton   Montague  ;    or  a  Youn*  Christian') 

Choice, 

Macnulay's  Miscellanies.  6  vols.  .  .  .  6  00 
Maxims  of  Washington.  By  J.  i  Schroeder,  1  00 
Mile  Stones  in  our  Life  Journey,     .       ,        ,    1  00 

MINIATURE  CLASSICAILIBRART. 

Poetic  Lacon;  or.  Aphorisms  frorthe  Poets,  38 
Bond's  Golden  Maxims,    ... 


Clarke's  Scripture  Promises.  Coralete, 
Elizabeth ;  or,  The  Exiles  of  Siben,  . 
Goldsmith's  Vicar  of  Wakefield,   , 

"  Essays,  ... 

Gems  firom  Amerii-an  Poets,   . 
Hannah  More'e  Private  Devotion, 

"  "        Practical  Piety.  ;  tcJs. 

Hemans'  Domestic  Aflfeftions,  . 
Hofi'man's  Lays  of  the  Hudson,  A. 
Johnson's  Historj-  o^  Rasselas,        .       • 
Manual  of  Matrimor.ji      .        .       ,        . 
Moore's  Lalla  Rookh,       .        , 

"        Melodies.    Complete,  • 

Paul  and  Virginia,   .        ,       ,      ,       , 
Pollok'»  Course  of  Time, 
Pi  re  Gold  from  the  Rirsn  of  Wjdoni, 

Thomson's  Seasons, 

Token  of  the  Heart.     Do.  of  AfifetioB.    Do 
of  Remembrance.      Do.    of  Iriendaoipc 


Do.  of  Love.  Each, 
Useful  Letter-Writer,  ..'.'. 
Wilson's  Sacra  Privata,  .... 
Young's  Nigtit  Thoughts,         .       , 

Little  Pedlington  and  the  PcdlingtonnnB, 
Priimatics;    Tales  and  Poems, 
P»per»  from  the  Quarterly  Review,         . 
Republic  of  the  United  States.  Its  Duties,  k 
Preservation  of  Health  and  Prevention  of  I 

ease,   

School  for  Polities.  By  Cha«.  Gaverre, . 
Selsci  Italian  Comedies.  Transla'ted,  . 
Bh«k»ipeare'«  Scholar.  By  R.  G.  White, 
Bp«cUlor  (The).  New  ed.  6  vols,  cloth, 
•wett'i  Treatise  on  Diseases  of  the  Chest, 
■toriM  from  Blackwood,  .... 


THACKERAY  S  WORKS. 
The  Book  of  Snobs,  .... 
Mr.  Browne's  Letters,  .  .  . 
The  Confessions  of  Fitzboodle,  . 
The  Fat  Contributor, 
Jeames'  Diary.  A  Legend  of  the  Rhine 
The  Luck  of  Barry  Lyndon, 

Men's  Wives 

The  Paris  Sketch  Book.    2  vol*.      . 
The  Shabby  Genteel  Story,      . 
The  Yellowplush  Papers.    1  vol.  16mo. 
Thackeray's  Works.  6  vols,  bound  in  cloth, 

Trescott's  Diplomacy  of  the  Revolution, 

Tuckemian's  Artist  Life,  .        . 

Up  Country  Letters, 

Ward's  Letters  from  Three  Continents, 

"       English  Items, 
Warner's  Rudimental  Lessons  in  Kuaic 
Woman's  Worth 


9  00 

::|oo 

50 


FhilosopMcal  Works, 

Cousin's  Course  of  Modem  Philosophy, 
"        Philosophy  of  the  Beautiful, 
**        on  the  True,  Beautiful,  and  Good 

Comte's  Positive  Philosophy.    2  vols. 

Hamilton's  Philosophy,  1  vol.  8vo. 

Poetry  and  the  Drama. 

Amelia's  Poems.    1  vol.  12mo. 

Brownell's  Poems.    12mo. 

Bryant's  Poems.    1  vol.  8vo.  Illustrated, 

"  **         Antique  mor. 

"  "         2  vols.  12mo.  cloth, 

"  *'  1  vol.  18mo. 

Byron's  Poetical  Works.    1  vol.  cloth, 

**  "  **  Antique  mor. 

Bums'  Poetical  Works.  Cloth, 
Butler's  Hudibras.  Cloth, 
Campbell's  Poetical  Works.   Cloth, 
Coleridge's  Poetical  Works.    Cloth, 
Cowper's  Poetical  Works,        • 
Chaucer's  Canterbury  Tales,    . 
Xante's  Poems.    Cloth,    .        .        . 
Dryden's  Poetical  Works.    Cloth,  , 
Fay  (J.  S.),  Ulric ;  or.  The  Voices, 
Goethe's  Iphigenia  in  Tauris.     Translated, 
GiUillan's  Edition  of  the  British  Poets.  12  v< 
published.    Price  per  vol.  cloth,       . 
Do.    do.    Calf,  per  vol. 
Griffith's  (Mattie)  Poems,         .        •        . 
Hemans'  Poetical  Works.   2  vols.  16mo. 
Herbert's  Poetical  Works.    l6mo.  cloth, 
Keat*'  Poetical  Works.    Cloth,  12mo.      . 
Kirko  White's  Poetical  Works.    Cloth,  . 
Lord's  Poems.    1  vol.  12mo.     ... 

"     Christ  in  Hades.    12mo.         . 
Milton's  Paradise  Lost.   18mo. 

"        Complete  Poetical  Works, 
Moore's  Poetical  Works.    8vo.  Illustrated, 

"  "  "         Mor.  extra,    , 

Montgomery's  Sacred  Poems.    1  vol,  12310. 
Pope's  Poetical  Works.    1  vol.  16mo. 
Southey's  Poetical  Works.    I  vol.  . 
Spenser's  Faerie  Queeue.  1  vol.  cloth,    . 
Scott's  Poetical  Works.    1  vol. 

**      Lady  of  the  Lake.    16mo.    . 

"      Marmion, 

"      Lay  of  the  Last  Minstrel,     . 
Sbakspeare's  Dramatic  Works,        .        . 
Tasso's  Jerusalem  Delivered.    1  vol.  16mo. 
Wordsworth  (W.).    The  Prelude,  . 


■Religious  Works. 


Arnold's  Rugby  School  Sermms.      . 
Anthon's  Catechism  on  the  Homilies,      • 

"       Early  Catechism  for  Children, 
Burnet's  History  of  the  Reformation.  3  vo^  . 

**      Thirty-Nine  Articles, 


D.  Appleton  &  Company's  List  of  Ner  Works. 


Bradley's  Family  and  Pariah  Sermons,    . 
Cotter*!  Mass  and  RubricB,        ,        .         . 

Coit's  Puritanism 

Evans'  Rectory  of  Valehead,    . 
Grayson's  True  Theory  of  Christianity,  . 
Grealey  on  Preacliint^,      .... 
Griffin's  Gospel  its  Own  Advocate,  .        • 
Hecker's  Book  of  the  Soul,       ,        , 
Hooker's  Complete  Works.  2  vols. 

James'  Happinesa 

James  on  tlie  Nature  of  Evil,  ... 
Jarvis'  Reply  to  Milner,  .... 
Kinnley's  Sacred  Choir,         .        . 
Keble's  Christian  'Year,    .        •        .        , 
Layman's  Letters  to  a  Bisnof^, 
Lo^&n's  Sermons  and  Expository  Lectures, 
Lyra  Apoatolica,        .... 
Marshall's  Not«s  on  Episcopacy,      .        . 
Newituiji'a  Sermons  and  Subjects  of  the  Day, 

*'         Essay  on  Christian  Doctrine, . 

Ogilby  on  Lay  Baptism, 

Pearson  on  the  Creed,  ..... 
Pulpit  Cyclopsedia  and  Ministers'  Companion^ 
Sewell's  Reading  Preparatory  to  Confirmation, 
Southard's  Mystery  oi  Godliness,  ? 
Sketches  and  Skeletons  of  Sermons,  . 
Spencer's  Christian  Instructed, 
Sherlock's  Practical  Christian,  ,  , 
Sutton's  Disce  Vivere — Learn  to  Lire,  . 
Swartz's  Letters  to  my  Godchild,  . 
Trench's  Notes  on  the  Parables,      ,        . 

"       Notes  on  the  Miracles. 
Taylor's  Holy  Living  and  Dying,    . 

"  Episcopacy  Asserted  and  Maintained 
Tyng's  Family  Conunentary,  ... 
Walker's  Sermons  on  Practical  Subjects, 
Watson  on  Confirmation,  .... 
Wilberforce'a  Manual  for  Communicants, 
Wilson's  Lectures  on  Colossians,  ,  . 
Wyatt'a  Christian  Altar,  .... 


1  00 
1  25 
1  00 


1  15 
1  75 
1  00 


Voyages  and  Travels. 

Africa  and  the  American  Flag,        .        .        ,  1  C5 

Appletons'  Southern  and  Western  Guide,        .  1  00 

"          Northern  and  Eastern  Guide,         •  1  25 

"         Complete  U.  S.  Guide  Book, .        .  2  00 

"         N.  Y.  City  Map 25 

Bartletm  New  Mexico,  Ac.  2  vols.  Illastrated,  5  00 

Bumet'l  N.  Western  Territory,        .        .        .  2  00 

Bryant's  What  I  Saw  in  California,        .        ,  1  25 

Coggeshall's  Voyages.  2  vols.         .        .        .  2  50 

Dix's  Winter  in  Madeira,         .        .        .        .  1  00 

Hue's  Travels  in  Ta:tary  and  Thibet.  2  vols.  1  00 

Layard's  Nineveh.    1  vol.  8vo.        .        .        .  1  25 

Notes  of  a  Theological  Student.    12mo.  .        .  1  00 

Oliphant's  Journey  to  Katmundu,    ...  50 

Parkins'  Abyssinia.    2  vols 2  60 

Russia  as  it  Is.    By  Gurowski,        .        .        .  1  00 

"      By  Count  do  Cnstine 1  25 

Sqnier's  Nicaragua.  2  vols.       ,        .        .        .  5  00 
Tappan's  Step  from  the  Nsw  World  to  the  Old,  115 

"Wanderings  and  Fortuujn  >f  Germ.  Emigrants,  75 

Williams'  Isthmus  of  Tehuantepec.  2  vols.  8vo.  3  60 

"Works  of  Fiction. 

GRACE  AGUILAr's  -WORKS. 
The  Days  of  Bruce.    2  vols.  12mo.  . 
Home  Scenes  and  Heart  Studies.  13mo. 
The  Mother's  Recompense.    12mo. 
Woman's  Friendship.    12mo.  .        . 
Women  of  Israel.  2  vols.  12mo.      . 

Banl     A  Story  of  Modem  Life.    12mo. 
Braes's  Fawn  of  the  Pale  Faces.  12mo, 
Busy  Moments  of  an  Idle  Woman,  , 
Chestnut  Wood.  A  Tale.  2  vols.      . 
Don  Quixotte,  Translated.  Illustrated, 
Dniry  (A.  H.).    Light  and  Shade,  . 
Dcpay  (A.  E.).    The  Conspirator,    . 
Klt«s  Parry  ;  or  Trials  of  the  Heart, 


UBS.XLUS    WORKS. 

Hearts  and  Homei  or.  Social  Distinctions,      .    I  M 
Prevention  Betteihan  Cure,  ... 
Women  of  Englal 


Emmanuel  Phillilrt.    By  Dumas,  .        . 
Farmingdale.    By^aroline  Thomas, 
Fullerton  (Lady  Q.    Ellen  Middleton, 

"  "  Grantley  Manor.  1  vol 

12mo. 

"  **  Lady  Bird.  1  vol.  12mo. 

The  Foresters.    BAlei.  Dumas,    . 
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Goldsmith's  Vicarf  Wakefield.    12mo. 
GUBlas.  With  SOEngravuigs.  Cloth,  gt.edg. 
Harry  Muir.    A  Tb  of  Scottish  Life,    . 
Hearts  Unveiled  ;  i,  I  Knavr  You  Would  Like 

Him 

Heartsease  ;  or,  M  Brother's  Wife.    2  vols. 
Heir  of  Redclj'/fe.!  vols,  cloth,      . 
Heloise  ;  or.  The  lirevcaled  Secret.  12mo. 
Hobson.   My  Unciend  I.    12mo.    . 
Holmes'  Tempest  id  Sunshine.    12mo.  . 
Home  is  Home.    A)omestic  Story, 
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lo.   A  Tale  of  tbeincient  Fane.    12nio. 
The  Iron  Cousin,  ly  Mary  Cowden  Clarke. 
James  (G.  P.  R.). Adrian  ;  or.  Clouds  of  tL' 

Mind, 

John ;  or.  Is  a  Coun  in  the  Hand  Worth  Two 

in  the  Bush,     ..... 

JXJLLA  »VANAGh's  WOKKS. 

Nathalie.  A  Tale  12mo. 

Madeline.    12mo 

Daisy  Bums.    l'2i>. 

Life's  Discipline.  ^  Tale  of  Hungary,    . 

Lone  Dove  (The).  A  Legend,  . 

Liniiy  Lockwood.  By  Catherme  Crowe, 

MISS  mntosh's  works. 

Two  Lives;  or,  1  Seem  and  To  Be.    12mo. 

Aunt  Kitty's  Tall.    12mo. 
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Margaret's  Home   By  Cousin  Alice, 
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Maiden  Aunt  (Tb).    A  Story, 
Manzoni.   The  Btrothed  Lovers.  2  vols, 
ilargaret  Cecil ;  r,  I  Can  Because  I  Ought, 
Morton  MontEgur,  or.  The  Christian's  Choice 
Norman  Leslie,  ly  G.  C.  H.  . 
PrismaticB.  Tale  and  Poems.  By  Haywarde, 
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"            To  -ove  and  to  Be  Loved.  12mo, 
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Amy  Herbert   i  Tale.    12mo. 

Experience  of  Lfe.  12mo 

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Katherme  Ash»n.    2  vols.  12mo.    . 
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Margaret  Percival.    2  vols 

Walter  Lcrimer,  and  Other  Talcs.    12mo. 

A  Journal  Kept  for  Children  of  a  Village  Schcol 

Surbenms  and  Shadows.   Cloth,      . 
Thtrpe's  Hive  of  the  Bee  Hunter,   . 
Thackeray's  Works.    6  vols.  12mo. 
The  Virginia  Comedians.    2  vols.  12mo. 
Use  of  Sunshine.    By  S.  M.  12mo.  .  _      . 
Wight's  Romance  of  Abelard  &  Heloise.  1  Jnao. 


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